According to the U.S. Environmental Protection Agency (EPA), more than 9 million pounds of R-22 were reported as being reclaimed in 2016. That is up from 2014 and 2015, during which time a little less than 8 million pounds were reclaimed each year, but still significantly below the more than 10 million pounds of R-22 that were reclaimed in 2008.

While 2016 showed a bump in the amount of R-22 being reclaimed, 2017 showed distinct signs of softening. As a result, refrigerant reclamation companies are concerned that recovery and reclamation efforts will not be enough to meet the HVACR industry’s needs once the production of R-22 ends in 2019.

SALES SLOWDOWN

Without a doubt, 2016 was a very good year for reclamation, said Carl Grolle, president, Golden Refrigerant, but 2017 was a different story.

“The first half of the year was very robust, but in the second half, R-22 sales declined dramatically,” he said. “I do not have a prediction for 2018, as it hinges on too many factors that we cannot foresee, including weather, pricing and availability of import gases, and government regulatory changes. On the surface, the reduction of new R-22 should tighten the market. Whether the existing surplus will be enough to meet the demand is anybody’s guess.”

According to Taylor Ferranti, vice president, refrigerant, A-GAS, the R-22 market slowed down in 2017 for a variety of reasons, including a lot of product in the respective channels; a cooler season; price increases driving contractors to use more replacement refrigerants; the absence of “dry” R-22 units; and a good economy, which led to more equipment being replaced rather than repaired.

“Even with these market challenges, we had a strong year of growth in 2017,” he said. “We expect 2018 to be even better, given that we have expanded our mixed gas separation capacity and incoming reclaim gas stream.”

Jay Kestenbaum, senior vice president of sales and purchasing, Aspen Refrigerants Inc., feels that the total amount of recovery and reclamation business over the past few years should have been greater, and the industry, as a whole, should be recovering much more than it has been.

“The market has not yet reached the level of overall recovery, reclamation, and reuse of refrigerants that will be necessary to service existing equipment following the 2019 end of production of R-22, based upon EPA’s estimates of continuing needs after that date,” he said.

The reason for that, according to Kestenbaum, may be linked to past EPA actions, through which production allowance caps were often restricted and then expanded.

“This may have given many a false sense of security in believing that there would be ample supply to cover future years,” he said. “The only true source for the long-term continuing supply of R-22 is recovery and reclamation, which needs to increase drastically.”

There is no question that the overall growth in reclamation of R-22 for the industry has been weak, said Kevin Zugibe, chief executive officer, Hudson Technologies Inc.

“Based upon EPA’s supply and demand estimates for R-22, it is evident that the reclamation market will need to grow significantly to fill the impending void,” he said.

Zugibe expects greater growth in 2018, as the impending shortage of R-22 becomes more evident.

“We feel confident that the best refrigerant for existing R-22 systems is reclaimed R-22 and that the reclamation industry can provide the necessary R-22 supply for the future, as it has done for CFC [chlorofluorocarbons] needs for over two decades,” he said.

Zugibe added that he has concerns over some R-22 substitutes, which he believes are not necessarily better than R-22 from a global warming potential (GWP) perspective and can lead to system failures if the change-out is not performed properly.

CHALLENGES AND OPPORTUNITIES

Kestenbaum also predicts stronger growth in 2018, thanks to the expanded and new regulations, the anticipated future phasedown of HFCs following the Kigali Amendment to the Montreal Protocol, and rising prices due to some industry anti-dumping actions.

“These should result in increased recovery and reclamation of many more products in greater quantities in 2018,” he said. “While the reclamation of R-22 continues to be a primary component of our industry, the reclamation of HFCs presents a longer term opportunity, particularly in light of the anticipated phasedown of HFCs.”

There will, of course, be challenges, said Kestenbaum, including the continued higher rates of mixed refrigerants coming back to reclamation facilities.

“The expanded array of refrigerant products, and the unfortunate continued trade practice by some to top off systems without using the same refrigerant, has resulted in higher mixed return rates, and will likely lead to premature failure of systems,” he continued. “Mixed refrigerant returns require extra cost in reclamation and obviously inflate the cost of future supply.”

Zugibe agreed, noting the use of many drop-in substitute blends has resulted in more cross-contamination every year.

“Although Hudson is a leader in fractional distillation, poor practices in the use of these substitutes result in more energy and cost to reclaim these refrigerants,” he said. “However, we are optimistic that with the ultimate phaseout of R-22 less than two years away, we are now entering a time in which the supply shortage will be obvious to the industry, which should energize the growth in reclamation.”

Grolle is also optimistic about 2018 and said his company is focused on gaining market share this year. Still, he noted that reclaimers have a very limited ability to select which refrigerants they receive in their collection programs, and that makes it difficult to adapt to changing market prices.

“We also face fixed costs associated with the reclamation and packaging of refrigerants,” he said. “When prices drop, it usually ends up as losses to the reclaimer; conversely, when prices rise, it can result in a better bottom line for the company.”

Looking ahead, Grolle expects the reclamation business to become even more technical, requiring sophisticated equipment and procedures to collect and process the newer blended refrigerants.

“The HFOs [hydrofluroolefins], along with R-32, are mildly flammable gases, which will require another round of investment in order to safely process and handle them,” he said.

This continuing evolution of refrigerants — and their accompanying regulations — means there will always be a need for reclaimers.

“Old habits die hard, but venting of refrigerants is illegal,” said Ferranti. “And reuse of refrigerants is only allowed if the product remains with the existing owner. As a result, we are optimistic that contractors and wholesalers want to do the right thing for the environment and will continue to utilize companies, such as ourselves, and increase their reclamation activities.”

Publication date: 4/9/2018

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