EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April

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EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
EPEE F-GAS INDUSTRY
   ROUNDTABLE

                       15
                      April
                      2019
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Agenda
13.00 – 14.00                           Registration of participants - Lunch
14.00 – 14.10   Introduction - Andrea Voigt, EPEE

14.10 – 14.25   Evolution of HFC prices - Öko-Recherche
14.25 – 14.35   Q&A
14.35 – 15.05   EPEE EU HFC Model update - Ray Gluckman, Gluckman Consulting
15.05– 15.15    Q&A
15.15 – 15.30                                             Coffee break
15.30 – 15.45   Update on implementation of the F-gas Regulation - Arno Kaschl, Bente Tranholm-Schwarz,
                European Commission (DG CLIMA)
15.45 – 15.55
                Q&A
15.55 – 16.05   Update on Brexit – Russell Patten, Grayling Brussels
16.05 – 16.15   Q&A
16.15 – 16.45   Dedicated industry activities – Andrea Voigt, EPEE; Angelica Candido, EFCTC; Wolfgang
                Zaremski, ASERCOM
16.45 – 17.00
                Q&A
17.00 – 17.10   HFC phase-down implementation: from a global perspective – Didier Coulomb, International
                Institute of Refrigeration
17.10 – 17.20
                Q&A
17.20– 17.30    Closing remarks
                Andrea Voigt, EPEE Director General
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Welcome
Andrea Voigt, EPEE
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Evolution of HFC prices
       Öko-Recherche
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Development of HFC prices
       EPEE F-gas Roundtable

           15 April 2019
        EPEE offices, Brussels

            Julia Kleinschmidt
          Öko-Recherche GmbH
       Frankfurt am Main, Germany
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Agenda

  ►     Methodology

  ►     Update on price developments in 2018

  ►     Short outlook to 2019

15 April 2019                                  6
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Methodology

Companies
• from the RAC sector                   Level 1

• from all supply chain levels                     2 to 3 gas producers (selling prices)

• from eleven different EU Member       Level 2
  States (Austria, Czech Republic,
                                          4 to 6 gas distributors (purchase and/or selling prices)
  Estonia, France, Germany,                            ~ 25 OEMs (purchase prices)
  Ireland, Italy, Portugal, Slovakia,
  Spain, UK)                            Level 3
                                          ~ 30 service companies (purchase and selling prices)
• provide data on purchase
  and/or selling prices of HFC
                                        Level 4
  refrigerants and lower GWP
  alternatives
                                                               (End-users)

• provide additional information
  on sectoral use, regional
  availability, prices of quota
  authorisations                         ► On average, 60 companies per quarter

15 April 2019                                                                                        7
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Methodology

  • Ex-post price analysis

  • Data collected via

        1) Standardised questionnaires

        2) Personal interviews
                • Additional information on underlying factors, transition to
                  alternative refrigerants in different sectors, expectations for market
                  and price trends in the next quarters, etc.

  • More information and questionnaires for download (as excel files)
    on the Öko-Recherche website
                • https://www.oekorecherche.de/en/implementation-f-gas-
                  regulation-eu-no-5172014

15 April 2019                                                                              8
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Methodology

Refrigerants covered by the price analysis so far:
                  Refrigerant   GWP100 years (AR4)     Refrigerant       GWP100 years (AR4)
                    R134a             1430                R449A                1397
                    R404A             3922                R450A                 604
                    R407A             2107                R452A                2105
                    R407C             1774                R513A                 613
                     R407F            1825                R507A                3985
                    R407H             1495               R1234yf                 4
                    R410A             2088               R1234ze                 7
                    R422D             2729           R717 (ammonia)              0
                    R507A             3985              R744 (CO2)               1
                     R32               675            R290 (propane)             3
                    R448A             1387           R1270 (propylene)           2

                ► Assessment of price developments for the entire refrigerant
                  supply chain and each supply chain level

15 April 2019                                                                                 9
EPEE F-GAS INDUSTRY ROUNDTABLE - 15 April
Update on price developments in 2018

                    • 2018 was split into two parts:
                        − Flattening of price increases after strong price rises at
                          the beginning of the year
                        − Price decreases in Q3 and Q4

                    • According to the interviewed companies, different
                      aspects might have affected refrigerant prices
                        − Residual quota quantities (mainly Q4)
                        − Stockpiling in previous years

                €       − Increased care in handling refrigerants
                        − Move to lower GWP alternatives
                        − Illegal trade

15 April 2019                                                                 10
Price development of R134a (GWP 1430)

                  Average prices at all levels of the supply chain
                          (price index, 2014 = 100 %)
            900
                                                          Gas producers (selling price)
            800
                                                          Gas distributors (purchase price)
            700
                                                          OEMs (purchase price)
            600
                                                          Service companies (purchase price)
  Percent

            500
                                                          Service companies (selling price =
                                                          end-user price)
            400

            300

            200

            100

                                                         Source: Öko-Recherche (2019)

15 April 2019                                                                                  11
Price developments at service company level

                   Average purchase prices of various HFC refrigerants
                              (price index, 2014 = 100 %)
        1500

        1300                                                           R404A (GWP 3922)

                                                                       R410A (GWP 2088)
        1100
                                                                       R407C (GWP 1774)

             900                                                       R134a (GWP 1430)
   Percent

             700

             500

             300                                                    * Data recorded in the
                                                                    previous price monitoring
                                                                    project
             100

                                                               Source: Öko-Recherche (2019)

15 April 2019                                                                           12
Development of abatement costs at OEM level

                   Average purchase prices of various HFC refrigerants
                                    (in €/t CO2e)

           30
                                                              R404A (GWP 3922)

           25                                                 R410A (GWP 2088)

                                                              R407C (GWP 1774)
           20
                                                              R134a (GWP 1430)
€/t CO2e

           15

           10
                                                         •   Prices of R134a/R410A
                                                             were stronger than for
            5                                                R404A when
                                                             considering the GWP
            0

                                                               Source: Öko-Recherche (2019)

   15 April 2019                                                                        13
Price developments at service company level

                Average purchase prices of various alternative refrigerants
                            (price index, Q2/2017 = 100 %)

          300
                                                                     R448A (GWP 1387)

          250                                                        R449A (GWP 1397)

                                                                     R452A (GWP 2140)
          200
                                                                     R513A (GWP 631)
Percent

          150                                                        R1234yf (GWP 4)

                                                                     R32 (GWP 675)
          100

          50                                                  ► Natural refrigerants:
                                                                no price changes
           0

                                                                 Source: Öko-Recherche (2019)

15 April 2019                                                                           14
Update on price developments in 2018

• Broad price ranges at service company level
     •   Both purchase and selling prices of R404A, R410A,
         R407C and R134a differed widely
           ►    75 % – 230 % and 190 % – 280% difference
                between minimum and maximum prices,
                respectively
     •   Regional price differences

• Gas availability:
     •   The indications have been significantly reduced
         towards the end of the year

• Prices of quota authorisations varied from 15 to 28
  €/t CO2e in Q4/2018
• Some gases sold at 50 % lower prices; these may be
  of illegal sources

15 April 2019                                                15
Short outlook to 2019

  • According to first indications, the trend of late-2018 seems to
    continue in Q1/2019
        − (Very) low demand
        − Further price reductions of refrigerants and quota
          authorisations

15 April 2019                                                         16
Thank you very much for your attention!

                      Julia Kleinschmidt
          julia.kleinschmidt@oekorecherche.de

                      Öko-Recherche
      Büro für Umweltforschung und -beratung GmbH
                    Münchener Str. 23
                  60329 Frankfurt/Main
                         GERMANY

                www.oekorecherche.de
                  @OekoRecherche
Any questions?
EPEE EU HFC Model
      update
Ray Gluckman, Gluckman Consulting
Any questions?
Coffee break
Update on implementation
 of the F-gas Regulation
  Arno Kaschl, Bente Tranholm-Schwarz,
    European Commission (DG CLIMA)
Any questions?
Update on Brexit
Russell Patten, Grayling
        Brussels
Any questions?
Dedicated industry
       activities
Andrea Voigt, EPEE; Angelica Candido, EFCTC;
       Wolfgang Zaremski, ASERCOM
Illegal imports of HFCs into
the European Union

April 2019
What are HFCs and what are they used for?
Potential Impacts of Illegal trade in HFCs
  Impact of Illegal Imports
  • Scope: HFC-products affecting broadly into sectors
    STATAC, Heating, Refrigeration and Automotive
    (Service)
  • Import of potential serious health & safety hazardous
    products (flammability/pressure/toxicity) – and lower
    product performance
  • A missed economic revenue for Member States:
     • Loss in Duty & VAT revenue
  • The environmental goals of the F Gas Regulation are
    being undermined and postponed

                              Confidential
Way forward to stop Illegal trade
Targeted Action at Customs level is needed

• Short term - URGENT:
   1.   Stop the illegal imports
        1.   from surrounding countries;
        2.   into main EU harbours

   2.   Identify false import declarations
        1.   into EU28;
        2.   in transit

• Mid-term: need a solid electronic notification system for customs
  to access the F Gas Quota Database

How can we work together to stop illegal HFC traffic in the EU and
its Member States?

                                                                 30
                                           Confidential
EFCTC Action plan against illegal imports:
  Communication strategy

• Press release: out on 28 March
  2019
   • Associations, magazines,
     journalists, users

• Website:
   • Banner and Info tab published
     on the EFCTC website:
     https://www.fluorocarbons.org/
EFCTC hotline

  Reporting of Potential Illegal impacts
  • Action Line powered by EQS is active:
     • https://efctc.integrityline.org
  • Webform can be completed in any language
  • Reporting of suspicious illegal actions can be done in
    full confidence
  • Use of the Action Line will be confidential and
    independently operated by the consultant
  • EFCTC members will have no access to individual
    reports
  • Further information: https://www.fluorocarbons.org/
                              Title of Presentation          32
We need your help
Basic immediate first steps

• Register on the HFC Registry – your main tool for controlling
  product flows

• Setup a Database for tracking product flows:
  imports/exports/local use/stockpiling

• Increase controls, and notify your authorities and DG CLIMA of
  any suspicious activity: CLIMA-HFC-REGISTRY@ec.europa.eu

• Check key Product codes at Customs (both EU and UN codes)
    • R134a, R404A, R410A, R32, R125

• Create a “Positive List” of responsible companies

                                                                   33
                                  Confidential
Conclusion – we have work to do!
 Together, we can have an impact on illegal trade

 • Many actions can happen today

 • Collaboration across all players:
    • At National level and in the region
    • EU Commission support
    • Industry support

 • We are here to listen
    • We need your local experience to better help you

                             Title of Presentation       34
Contacts

EFCTC – European Fluorocarbons Technical Committee

Cefic – The European Chemical Industry Council
Rue Belliard 40, Box 15
B-1040 Brussels, Belgium

http://www.fluorocarbons.org/
Any questions?
Framework – Phase down

The European F-Gas Regulation and other legal regulations are forcing a rethink within the HVAC & R
industry:
The refrigerants that currently dominate the market, such as R404A, R410 A and R134, the so-called
hydrofluorocarbon's (HFCs), have to be gradually phased down by 2030! Refrigerants with a higher GWP
value will be replaced be more environmentally friendly alternatives, such as flammable refrigerants.
This will be accomplished to:

          New and longer term product solutions, that deliver equal and
          better cooling performance, but a lower GWP (global-warming
          potential) for new equipment's

          Supporting the market to adapt new technologies through
          training and awareness especially about the safe use of
          flammable solutions

                                                                                                 17/04/2019   38
Framework – High relevance!

Lack of individual advice: The market – decision makers, planners and operators – does
not have the necessary individual solutions to be able to make the right short-term (refilling)
and long-term decisions (new installation) within the prescribed time.

          Hight relevance for the HVAC & R industry:
          without solutions, the F-Gas Regulation cannot be implemented
          adequately!

                                                                                                  17/04/2019   39
Coolektiv – Shaping change together.
Industry experts developing solutions.

The expert committee
On the initiative of the Westfalen Group, experts from companies
and institutions of all relevant market participants have joined
forces.
Within two years, solutions for the refrigerant market will be
generated and made available to support the market.
Every market perspective – whether a specialist company,
manufacturer, operator, dealer or trade association – should be
included. The aim is to illuminate and answer relevant questions
on many different levels.

                                                                   17/04/2019   40
Coolektiv market launch in October 2018

                                           Panel discussion in front of 150
                                            guests: as part of the Chillventa on the
                                            evening of the first day of the trade fair
                                            in Nuremberg
                                           Audience participation
                                           Subsequent survey of promoters:
                                            Guests commented very positively on
                                            the Coolektiv initiative and showed
                                            great interest in participating in further
                                            expert committee information events

                                                                            17/04/2019   41
COOLEKTIV participants – initiated by the Westfalen Group

        Wolfgang Zaremski –                   Sebastien Casterman –
        Asercom AISBL                         Honeywell Deutschland GmbH

        Heribert Baumeister – Federal Guild   Burkhard Rüßmann –
        Association (BIV) of the German       L&R Kältetechnik
        Refrigeration Trade
                                              Egon Schrezenmaier –
        Laurent Zielezinski –                 Schrezenmaier Kältetechnik
        Chemours International                GmbH & Co. KG
        Operations Sàrl
                                              Harald Conrad –
                                              Westfalen AG

                                                                    17/04/2019   42
Goals of Coolektiv

 To identify the problems/challenges of the industry
    By compiling & evaluating existing market intelligence

 To prioritise and evaluate problems/challenges
   Expert committee & event formats (inclusion of other market participants)

 Develop solutions and tools for the market
    Expert committee

 To perform preliminary tests
    Market test & event formats (inclusion of other market participants)

 To make solutions and tools available to the market
    Implementation & publication by participants of the expert committee
                                                                                             43

                                                                                17/04/2019
Market-relevant focus topics and working committees

            Policy            Operators          Training and
                             and planners           further
        Illegal placing on   System concepts /    education
           the market of        refrigerants       Normative
            refrigerants                         DIN standards /
                                Security /
                                insurance          guidelines

                                                                   17/04/2019   44
Work results and next steps

 13.11.2018: Expert                                               18.01.2019: Expert
                                  18.01.2019: Political                                        March 2019: Political
 committee meeting,                                               committee meeting, Neu-
                                  committee action                                             committee action
 Dortmund                                                         Isenburg

 Definition of the relevant    Cover letter on the illegal    Development of three        2. Cover letter sent to
  topics / working               placing on the market of        focus topics                 customs offices, customs
  committees:                    refrigerants to the                                          investigation offices and
                                                                Definition of next steps
   Policy                       European Commission                                          labour inspectorates on
   Operators &                  and politically responsible    Discussion about             the illegal placing on the
      planners                   institutions                    collaboration with VDKF      market of refrigerants
   Training and further                                         Supersmart, Mr Jeschkeit
                                Feedback from the                                           Various feedback
      education                                                  & Mr Egly
                                 European Commission
                                                               Press release
      Press release             Press release

                                                                                                                                  45

                                                                                                     Sample slides   17/04/2019
Work results and next steps

                                  02.04.2019: EHI Refrigeration       10.04.2019: EFCTC            15.04.2019: EPEE F-Gas
 April 2019: Exclusive
                                  Technology WG, presentation         meeting, presentation of     round table, presentation
 interview KKA
                                  of COOLEKTIV                        COOLEKTIV                    of COOLEKTIV

 Exclusive interview in the      Mr Casterman                    Mr Zielezinski/Mr Gerstel     Mr Zaremski (Asercom)
  KKA with Mr Kemler, Mr           (Honeywell) and Mr               (Chemours) present             presents COOLEKTIV and
  Zaremski & Mr Zielezinski        Rössling (REWE) present          COOLEKTIV and outline          outlines the measures for
  on the illegal placing on        COOLEKTIV,                       the measures for               combating the import of
  the market of refrigerants       presentation of case             combating the import of        illegal refrigerants
                                   studies                          illegal refrigerants
 After publication: Interview
  to be sent to entire
  refrigeration/air-
  conditioning press

                                                                                                                                      46

                                                                                                         Sample slides   17/04/2019
Work results and next steps

 16.04.2019: EPEE F-Gas          08.05.2019: Expert            07.11.2019: COOLEKTIV
 working group, presentation     committee meeting,            Event, Grand Hall
 of COOLEKTIV                    Münster                       Zollverein, Essen

 Mr Zaremski (Asercom) to      Development of further      Presentation of the
  present the initiative and     content and measures         previously developed
  outline the measures for                                    solutions / measures
  combating the import of       Coordination of results
                                 with all experts            Evaluation and further
  illegal refrigerants
                                                              elaboration of solutions /
                                Definition of next steps     measures
                                Press release
                                                             Press release

                                                                                                                        47

                                                                                           Sample slides   17/04/2019
Events – The market is also participating in development

COOLEKTIV is in a constant dialogue with the market
This permits the best possible resolution and overcoming of market-relevant
problems and challenges.
At events, the market participants should evaluate the solutions developed so far, test
them and provide a new and important impetus for further development.

          In cooperation with the market participants, COOLEKTIV will
          develop the best (individual) solutions for the market!
          Save the date, 07.11.2019 in the Grand Hall Zeche
          Zollverein in Essen!

                                                                                          17/04/2019   48
Contact
Jeannine Daniels & Evelin Stusek
Tel. 0049-251 695-934 / -144
coolektiv@westfalen.com
Any questions?
HFC phase-down
implementation: from
 a global perspective
Didier Coulomb, International Institute of
             Refrigeration
EPEE F-GAS ROUNDTABLE
                       MONDAY 15 APRIL, 2019

   HFC PHASE-DOWN IMPLEMENTATION:
             FROM A GLOBAL PERSPECTIVE
Didier COULOMB
Director General
INTERNATIONAL INSTITUTE OF REFRIGERATION (IIR) ― www.iifiir.org

                                                                  www.iifiir.or
                                                                                  53
                                                                              g
The Kigali amendment

 Entered into force in January 2019

 Creates several categories of countries:
  →Developed countries, the EU is a pioneer
  →Developing countries, except Gulf countries and
    some South Asian countries
  →Other developing countries
  →Hot countries (stationary air conditioning)

                                           www.iifiir.or
                                                           54
                                                       g
A5 countries                       A5 countries
                  A2 countries                (Group 1)**                        (Group 2)***
Baseline           2011-2013                   2020-2022                          2024-2026
Formula           Average HFC                 Average HFC                Average HFC consumption
                  consumption                 consumption
HCFC        15% or 25% baseline*              65% baseline                      65% baseline

Freeze                  -                         2024                               2028
1st step          2019 – 10%                   2029 – 10%                        2032 – 10%
2nd step          2024 – 40%                   2035 – 30%                        2037 – 20%
3rd step          2029 – 70%                   2040 – 50%                        2042 – 30%
4th step          2034 – 80%
Plateau           2036 – 85%                   2045 – 80%                        2047 – 85%

* Belarus, Russia, Kazakhstan, Tajikistan, Uzbekistan
** Group 1: Article 5 parties not part of Group 2
*** Group 2: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, India, Iraq, Iran, Pakistan

                                                                                        www.iifiir.or
                                                                                                    g
Various willingnesses initially, thus various obligations
But finally, a real ambition almost all over the world
  Examples:
    ‒India: R32, hydrocarbons …
    ‒Saudi Arabia: district cooling …
US case
Everywhere, however, the energy issue :
  A key discussion within the Montreal Protocol bodies
  A need for internal cooperation to define a national
    strategy: the Paris agreement

                                                  www.iifiir.or
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The EU is in advance  illegal trade…
But other regions start to change
 →An opportunity for EU companies
 →However, an adaptation is necessary: each country
   is different. We cannot simply export our models:
   ex: CO2 as a refrigerant.
 →Cooperation UNE – R. Gluckman
 →Presence of EPEE in international conferences: UN
   conference, IIR Congress …

                                           www.iifiir.or
                                                           57
                                                       g
25th IIR International Congress of
Refrigeration 2019

                                     www.iifiir.or
                                                 g
Thank you!

                             Questions?

                Didier Coulomb, Director general
                                     iif-iir@iifiir.org

INSTITUT INTERNATIONAL DU FROID | INTERNATIONAL INSTITUTE OF REFRIGERATION
              www.iifiir.org | iif-iir@iifiir.org |   |   |   | #refrigeration

                                                                                 www.iifiir.or
                                                                                                 59
                                                                                             g
Any questions?
Closing remarks
   Andrea Voigt, EPEE
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