The Kigali deal has placed a growing focus on the environmental impacts of hyfrochlorofluorocarbons (HFCs), which is pushing refrigerant alternative solutions to the top of the corporate sustainability agenda. But what actions should companies take to start the transition away from HFCs, and what are the benefits for doing so?
In the recent wave of climate action, governments have finalised 7 years of negotiations regarding the production and use of HFCs, the chemicals introduced to replace ozone depleting substances, used as coolants in refrigerants such as air-conditioners and fridges.
Although refrigerants are essential for business operations, particularly those taking place in manufacturing plants in warmer countries, their increasing demand and use has turned out to be problematic. This is because the HFCs used in refrigerants have a global warming potential that is several thousand times greater than CO2, and thus greatly contribute to climate change.
As such, in October last year, nearly 200 countries signed a legally binding deal in the Rwandan capital, the Kigali deal, which will gradually cap the use of HFCs from 2019 onwards. Whilst the Kigali deal has largely slipped under the radar, being shadowed by the acclaimed Paris Agreement signed just few days earlier, its outcome has clear implications in the way businesses operate.
Given the EU environmental regulation already in place regarding HFCs (Regulation 517/2014, known as the F-gas Regulation), UK and EU based companies are unlikely to see further regulatory tightening. In other parts of the world, however, some companies may experience greater scrutiny when it comes to reporting, mitigating and avoiding HFC emissions. So how should companies act to start the transition away from HFCs?
- Recycling HFCs: This is probably one of the most immediate actions companies can take. Refrigerant units already produced will continue to leak GHG emissions and it is unrealistic to believe that companies will dispose of equipment that is still functional. A simple solution that does not require drastic changes and investment is the recycling of HFCs. HFCs can be recovered from end-of-life equipment, restored to virgin grade purity, and re-used in existing or newly manufactured equipment, without a compromise in performance. Despite being an uncommon practice, the recycling of HFCs is an effective process and it can potentially avoid emissions the equivalent of 18 billion tons of CO2 between now and 2040.
- Replacing HFCs with climate friendly alternatives: There are plenty new efficient and climate friendly alternatives for HFCs available today. The selection of an alternative substance will depend on the application where HFCs are used, and particularly on its thermodynamic and safety requirements, as well as on the ambient temperature at the location where the equipment is used. Some of the HFC alternatives are available here.
- Offset leakage and improve service practices: Where possible, companies are advised to replace their old equipment with modern alternatives. When this is not a viable solution it is recommended that companies have regular refrigerant maintenance for early detection of leaks or adopt leak detection technology.
- Supply chain tracking: Companies should account for HFC emission beyond their own operations and monitor HFCs emissions across their supply chain as well as incentivise their suppliers to do so.
Good examples of companies that have already adopted these actions are Coca-Cola, Nestle and Walmart. Collectively, they have installed new refrigeration systems in over 4,000 stores and production units, committed to use natural refrigerant when available and to reduce the environmental impact of existing equipment by improving energy efficiency and minimising leaks.
HFC manufacturers are already exploring market opportunities resultant from the Kigali deal. Honeywell Fluorine Products for example, is investing nearly $900 million in research and development and is establishing commercial partnerships to provide a large portfolio of alternative solutions to HFCs to help countries in their transition.
As with many other areas in CSR, there is a strong business case for companies to demonstrate leadership in this area. Companies that have ambitious HFC reduction targets will not only comply with increasingly tight regulations regarding HFCs but will stay ahead of future policies. These will be the same companies that will lead innovation, adopt and drive the development of latest technologies, and thus safeguard efficiency, save money and ensure future profitability.
The Kigali deal is a great driver for the setting up of metrics against which the progress of companies in the reduction of HFCs can be measured against and translated into environmental benefits. Quantifiable climate benefits means that companies can be benchmarked against each other in terms of their efforts to reduce emissions. Those that demonstrate leadership in this serve as examples to their peers and competitors and bolster credibility and reputation among their stakeholders.