Actions, or to be more precise inactions, by the Environmental Protection Agency (EPA) have caused confusion and uncertainty about the availability of virgin R-22 for residential and commercial cooling and refrigeration systems.
R-22, or as it is commonly known, Freon, is a hydrochlorofluorocarbon (HCFC) gas that for decades has been used as a refrigerant in dozens of residential, commercial, and industrial appliances, such as central air conditioners, heat pumps, and commercial refrigerators. It’s not a byproduct or emissive gas, but unfortunately when it is released into the atmosphere it is known to deplete the ozone and it has a high global warming potential.
So, how did we get into this situation with rising prices? The EPA controls the production and import of HCFCs through Allocations Rules that tell each companies how much virgin R-22 they are allocated to produce or import in a given year. Allocations rules typically cover a five year term.
Just days before the start of 2010, the EPA issued an Allocation Rule for 2010 through 2014. This particular Allocation Rule caught the industry off guard when it banned the manufacture of pre-charged HVAC equipment intended for new installations, but allowed the manufacture of uncharged, or dry-charged units, to be used as a replacement parts.
The 2010 Allocation Rule failed to recognize a legal trade between two manufactures who sued the EPA and won in 2011. The judgment ordered EPA to perform a regulatory “do-over” for the remaining years (2012-2014) with an Adjustment Rule to allow those companies to recoup money from the lost allocations.
Unfortunately, the EPA didn’t finish the Adjustment Rule before the year it was to take effect and 2012 began with the producers and importers of R-22 without the legal authority to manufacture or import R-22.
Recognizing this problem, the EPA sent “No Action Assurance” letters to the producers and importers of R-22, alerting them that they could temporarily resume the manufacture and import of R-22 for the rest of the year even though EPA hadn’t set the new allocation amounts. These letters advised that production would be curtailed by 45% of their last allocation amount.
At the time it was expected that it would take the EPA until the summer of 2012 to complete the Adjustment Rule.
Unfortunately, the EPA still hadn’t finished the Adjustment Rule by the start of 2013, so once again the EPA had to issue “No Action Assurance” letters.
Finally this past April, the EPA released the Final Adjustment Rule for 2012-2014. This means that some of the uncertainty has been cleared up and manufacturers and contractors know what to expect through 2014. However, the price of R-22 may not drop due to the rule being completed.
Even with the final rule in place, the question remains, will this issue arise again when the EPA needs to set new allocations for 2015-2019?
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