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INSIGHT: A Neglected Business Opportunity to Save the Planet

June 8, 2020, 8:00 AM

Climate change is a big problem, and preventing its worst impacts is—increasingly—a big business. But the federal government’s refusal to sign an important international treaty is stopping American industry from taking a lucrative leadership role in reducing harmful greenhouse gases (GHGs).

Scientists have long reported that GHGs are causing global warming. Most discussion has centered around the climate impact of carbon dioxide (CO2). However, today refrigerants used in air conditioners and other appliances emit hydroflurocarbons (HFCs), a GHG that is over 100 times more potent than CO2 in causing global warming.

With the hot days getting hotter and more frequent, and heat waves becoming more common, the use of HFCs around the world is growing. Countries around the world have come together to address the problem through an international treaty. But the U.S. is not one of them, leaving it on the outside as others take advantage of business opportunities to reduce HFCs.

Role of HFCs in Global Warming

The damaging potency of HFCs has avoided public scrutiny. EPA reported CO2 as accounting for 81% of GHGs emitted in 2018; HFCs accounted for only 3%. The role of HFCs sounds minor until you factor in their outsized climate impact.

The potency of these emissions is measured by the Global Warming Potential (GWP) which compares CO2 which has a GWP of 1, to other chemicals over a 100-year period. EPA defines the GWP as a measure of how much energy the emissions of 1 million metric tons of a gas will absorb over 100 years, relative to the emissions of 1 million metric ton of CO2. The larger the GWP, the more that a given gas warms the earth compared to CO2.

The average GWP for the three most abundant HFCs is 3090 (the average GWP of HFC-143A of 4800; HFC- 125 of 3,170 and HFC-134A of 1300). Therefore, adjusting HFC emissions upward based on its GWP means that in 2018 HFCs were 114 times (3090x3 / 81) more destructive than the total CO2 emissions in terms of
global warming.

How have HFCs come to play such a prominent role in climate change? Emissions from HFCs started increasing in 1987 following the adoption of the Montreal Protocol which replaced ozone-depleting chemicals with HFCs. Although the phase-out of ozone-depleting chemicals was essential at the time, we have since learned that our increasing reliance on HFCs has greatly accelerated the rate of global warming.

The Importance of the Kigali Amendment

The 2016 Kigali Amendment to the Montreal Protocol which addressed this problem by phasing out the production and consumption of HFCs over time was signed by over 90 nations. The U.S. played a leadership role in the development of the Kigali Amendment, but Congress refused to approve the agreement and the president has still refused to sign it. Instead, HFC emissions in the U.S. have skyrocketed by 268.8% from 1990 to 2018, as they continue to be used as a substitute for ozone-depleting substances.

The technology exists to phase out the production and consumption of HFCs. Ninety percent of refrigerant emissions occur at the time of disposal. After being carefully removed and stored, refrigerants can be purified for reuse or transformed into other chemicals that do not cause warming.

This is not a widespread business practice, in part, due to the net projected cost of approximately $903 billion over the next 30 years (roughly $30 billion per year). In contrast, the cumulative global market for air conditioning and other appliances that rely on refrigerants will be over $1 trillion over the next 10 years (roughly $100 billion per year). Industry trade groups concluded that the Kigali Amendment “can be accomplished without an increase in costs to the U.S. consumer, and in some cases can generate savings.”

The cost of purifying or transforming HFCs is outweighed by the potential market opportunities. According to the Lawrence Berkeley National Laboratory, 700 million air conditioning units will have come online worldwide by 2030. These units will require purified HFCs. The global export market for air conditioning and other such appliances will grow by 6% per year to meet the needs of China, India, Latin America, and Africa.

The U.S. Chamber of Commerce has warned that failure to ratify the Kigali Amendment will shrink the U.S. share of the global market by 14%. Moreover, there will eventually be trade sanctions imposed for doing business with countries that are not signatories.

From an environmental perspective, the UN’s 2018 Intergovernmental Panel on Climate Change Report found that the earth has warmed about 1.8ºF since the beginning of large-scale industrial coal burning in the 1850s. If GHGs continue at the current rate, the atmosphere will warm up another .9ºF to 2.7ºF, in 20 years—flooding coastlines and intensifying droughts and poverty.

Signing Agreement Would Flatten Curve

According to the Government Accountability Office, the price tag for U.S. taxpayers for the environmental destruction for cleanup and disaster assistance from flooding and storms will be $35 billion per year by 2050. By contrast, if the Kigali signatories meet their commitments, in 20 years there would be a “flattening of the curve” on global warming by approximately .72ºF of the .9ºF, so as to almost maintain our current warming level. The reuse of HFCs and finding alternative chemicals that do not cause global warming is an important starting point to reverse the trend of global warming.

The current political struggle over whether to address HFCs has been on full display. The Trump administration proposed a regulation (struck down for procedural reasons) that had the practical effect of allowing all users of ozone-depleting substances to shift to using HFCs. Meanwhile, bipartisan groups of cosponsors have put forth bills in the House and in the Senate (H.R. 5544 and S. 2754), to move away from and reduce the use of HFCs.

Taking our place as a leader in the fight to reduce HFCs should not be a partisan issue. As 13 prominent Republican senators have asserted: “The Kigali Amendment will protect American workers, grow our economy, and improve our trade balance all the while encouraging further innovation to strengthen America’s leadership role.”

The U.S. must sign the Kigali Agreement now and work in partnership with other countries, industry, and affected stakeholders to guide us to the path for reducing global warming.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Dan Reich served as a Department of Justice Civil Division trial attorney and an assistant regional counsel at EPA Region 9 in San Francisco before retiring in 2017 with 33 years of federal service. He is a member of the Environmental Protection Network (EPN), a nonprofit organization whose members include more than 500 EPA alumni dedicated to pushing back against this administration’s efforts to roll back rules and policies that protect the environment and safeguard public health.