US-China climate deal could boost refrigerant market

After months of talks, the presidents of the United States and China reached agreement on an ambitious joint plan to curb carbon emissions in a watershed moment on Wednesday, 12 November. But what does this pact entail for the future of the HVAC&R industry?

On 12 November, leaders of the world’s number one and two carbon polluters, President Barack Obama and President Xi Jinping of China found common ground on the threat posed by climate change and set out a plan to cut greenhouse gases and hopefully incite other nations around the globe to follow suit. The deal includes new targets for carbon emissions reductions by the United States, upping the goal from 26% below 2005 levels by 2025 to 28%, and an unprecedented commitment by China to peak carbon emissions by 2030 in addition to obtaining 20% of its energy from non-fossil fuels by 2030.

Renewed focus on climate change mitigation supports global talks

The newly agreed climate deal’s future is not yet certain, but could certainly prove to be a step in the right direction for the fight against climate change worldwide.

The pledge ups the ante for international negotiations on climate action. Both nations, as the world’s largest emitters, have displayed political will and initiative, hopefully breaking the lethargy that has largely clouded climate summits. In conjunction with the EU’s already standing goal to cut emissions by 40% of 1990 levels, multilateral action on climate change is likely shifting to a much more dynamic environment. In addition, the agreement should serve as wakeup call that mitigating and reversing climate change is urgent and should be taken seriously.

Will emphasis on cutting HFCs increase investment in natural refrigerants?

The deal is comprised of three key elements:

Fast action to cut short-lived climate pollutants, namely HFCs
Fast action to cut carbon dioxide emissions
Beginning of action to manage CO₂ after emission

The importance placed on cutting HFCs will likely mean an increased focus on developing and using HVAC&R technologies with working fluids that do not contribute to global warming or depletion of the ozone. If this agreement is taken seriously and is supported by increased governmental support of climate friendly technologies, it will put wind in the sails of the natural refrigerants market, particularly outside of Europe.

Natural refrigerants in the US

In the US, the natural refrigerant market has great potential and is steadily growing. Ammonia, hydrocarbons, and CO₂ are all approved under the EPA’s Significant New Alternative Policy Programme (SNAP), subject to use conditions, and the use of hydrocarbons could soon be expanded to new applications. Complementing this, the California Air Resources Board currently is considering a number of measures that would limit the use of high-GWP refrigerants.

Natural refrigerants in China

The Chinese government, as part of the ‘Room Air Conditioning Industry HCFC Phase-out Management Action Plan’, offers subsidies incentivising the implementation of R290 air conditioning systems. Furthermore, the government also supports the use of CO₂/ammonia cascade systems in industrial applications as efficient and environmentally friendly technology as well as heat pumps, which could open opportunities for success with CO₂ heat pumps, which have gained significant ground in Japan already.

Fast-growing China pledges to reduce reliance on coal

China’s renewables pledge is far from negligible. As the workshop of the world, experiencing rapid industrial growth, China burns more fossil fuels than any other nation. Twenty per cent of the energy used by such a vast industrial economy is significant. Already China has invested a significant amount into renewable energy sources, more than the entire European Union combined.

China is home to some of the worst air pollution in the world, to which national leaders have responded by turning their attention to cutting back China’s reliance on coal in order to clean the air as well as allow the industrial power to take part in commitments against climate change.

US Republicans resist agreement

The new climate deal has come at an interesting time in the United States, with Republicans having recently gained control of Congress. The deal is already receiving negative feedback. Some right wing US politicians claim that the agreement puts too much strain on the American economy, and new Majority Leader of the Senate Mitch McConnell has said it “requires the Chinese to do nothing at all for 16 years”.