As mentioned in an earlier article, beginning January 1st, 2022, the United States will implement the American Innovation and Manufacturing (AIM) Act to cap and phase down the production and consumption of hydrofluorocarbons (HFCs) in the United States. This legislation will phase down the U.S. production and consumption of HFCs by 85% over the next 15 years. The phase down will be facilitated by the EPA issuing allowances on an annual basis every October 1st for the following year until 2024, at which time they will establish the allowance allocation framework and create the subsequent rulemaking to govern allocations for calendar years 2024 and beyond.

HFCs are potent greenhouse gases used in a wide variety of applications, such as refrigeration, air-conditioning, and aerosols. HFC gases include, but are not limited to, R-134a, R-404a, R-407c, and R-410a. With supply being limited by 85% over the next 15 years, and the demand still increasing for these gases due to a lack of widespread applications for Hydrofluoroolefin (HFO) gases, there will now be upward pressure on HFC pricing, until these HFO gas applications are available and taking precedent.

This upward pressure on pricing will be especially dynamic in the R-134a market. Currently there is no EPA-approved heavy-duty applications for R-134a’s replacement refrigerant, R-1234yf.   These applications will  take time to be approved as risk assessments and use conditions must be tested to ensure full safety in these heavy-duty applications. R-134a inventory will also still be needed to service existing equipment, placing an additional strain on R-134a supply. Finally, R-134a is not only a stand-alone gas, it is also used to blend most HFC gases used in refrigeration and HVAC applications, which are being phased down via the AIM Act. As a result of this combination of factors, we anticipate R-134a supply to be extremely tight and the price of R-134a (and other HFC gas prices) to continue to increase.

LGL 2021

 

R-134a Market Trends/Pricing Projections
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