The Kigali Amendment: Time for retailers to create the business case for a HFC phase-out
The UK ratified the Kigali amendment on harmful hydrofluorocarbon (HFC) greenhouse gases last week, but building the business case to switch to costly alternatives requires a delicate approach.
The signing of the Montreal Protocol in 1987, a global agreement to phase-down ozone-depleting CFCs and substances, was a prime example of unintended consequences. While the deal has worked in shrinking the hole in the ozone layer, replacements for CFCs have now been issued their own phase-out.
HFCs were the replacement gases for CFCs but have been discovered to have a global warming impact up to 4,000 times higher than CO2. The Kigali Amendment aimed to rectify these consequences and last week, the UK became one of the first major nations to ratify the amendment.
In the UK, HFC supply will drop by 85% between 2019 and 2036, but benefits for the planet will create a lot of conversion pains for UK retailers. A European Union F-gas Regulation also looks set to cut the supply of HFCs by almost 80% by 2030, and that supply will fall to 48% below 2015 levels next year.
A whitepaper launched last month from University of Birmingham, commissioned by engineering firm Emerson, notes the European retailers are behind schedule on HFC phase-outs. The research found that food retailers should have installed 18,500 low global warming potential (GWP) systems in 2015 alone. However, only 9,000 systems have been installed across Europe to date, while just 500 stores have wholly converted to water-cooled hydrocarbon integrals.
There are some companies shining a light on how retrofits and rollouts can be done. Tesco could reduce its carbon footprint by 40% – well above the 26.5% reduction it is targeting against a 2006 baseline – through the installation of low-GWP refrigerants across 1,200 UK stores.
The retailer is converting to a new low-GWP Honeywell refrigerant over the next three years, with 60 stores already retrofitted with the system.
Speaking to edie, Tesco’s head of refrigeration & HVAC Matthew Reeves-Smith claimed that the retrofit was part of a “business continuity” ethos that meant that Tesco could avoid risks associated with future supply and costs, by targeting new systems well ahead of legislative deadlines.
“From our point of view, the business perspective was more about ensuring continuity of sales and with the legislation changing, it meant that we wouldn’t be able to sustain sales with the current models beyond 2020,” Reeves-Smith said. “There would certainly be some sort of risk there and the business agreed to this for a continuity purpose.”
Retailers like Tesco have had to juggle a legislative environment of constant change when it comes to their cooling and heating equipment.
From January 2015, the last of the synthetic HFC gases were banned across Europe. The R404A gas – with a GWP of 3,922, considerably higher than the 2,500 limit being introduced – is now the most recognisable and highly used gas by retailers using stationary refrigeration systems, but this gas has also been subjected to a 15-year phase-out programme. By January 2020 the use of this type of gas will be banned across all stationery refrigeration systems with a charge greater than 10kg.
But the legislative environment is as concealed as it is complex. A survey from Emerson found that 40% of food retailers are unaware of regulatory changes relating to HFC reductions. Couple this with those retailers that are already behind schedule, and suddenly the number of boardrooms that will be having conversations on the phase-out will grow as the deadline looms closer.
Crucially, there is a predicted cost increase and decline in availability regarding current refrigerant gases, which means that companies that rest on their laurels could soon be faced with price spikes and risks to supply if they don’t start the conversion.
The Emerson whitepaper found that CO2 is the most common replacement for HFC, as they are capable of delivering huge emission benefits. Aldi, for example, reports new CO2 systems will help cut emissions from refrigeration by 99% in UK stores.
However, the same whitepaper found that the capital expenditure on CO2 systems can be 5-10% higher than the systems they are replacing, with costs for SMEs reaching as much as €51,000 more per store across a 10-year period. Energy consumption can also increase as well.
In fact, Emerson is urging businesses to “take advantage of the Kigali Amendment” to select the most “cost-effective and crucially environmentally-friendly refrigeration technology with a long-term mindset”.
So how can a sustainability professional approach the board and ask them to sign off the rollout of a more expensive, and often less energy-efficient system?
According to Reeves-Smith, using a single selling point to create the business case is likely to fall of deaf ears, but combining new legislative pressures with potential carbon savings can shape the conversation.
“A lot of businesses aren’t fully aware of some of the cooling systems that they’ve got and the impact it does have on their overall carbon footprint,” Reeves-Smith added. “Most of the legilsation has been quite a long-term view on what is going to happen, and it’s quite hard to communicate that to the business to realise the impact.
“You need to understand from current providers and equipment suppliers what choice you have today, and how does that marry with future legislation changes. You need to uncover what the hard and soft benefits are of longer life systems and energy savings. Purely on the energy, and probably the carbon benefit, it doesn’t really make good commercial sense to do it, but bringing the three things together certainly makes it a compelling case.”
Sainsbury’s is another UK supermarket seeking to capture energy savings through new cooling systems. It is using F1-inspired technology from William Advanced Engineering to steer cold air directly back down fridge units to stop it from spilling out onto the aisles.
It is believed the system will created energy savings of up to 15%. The retailer has been testing the product at a number of stores in an effort to achieve its target of reducing absolute operational carbon emissions by 30% by 2020. Sainsbury’s will install the new technology across its 1,400 stores by mid-2018.
But for retailers less far along the HFC journey than Tesco or Sainsbury’s, the cost factor could be crucial; in fact, it appears that the cost benefit could act as the hidden part of the boardroom equation. Emerson’s survey found that safety (57%), energy efficiency (53%) and environmental sustainability (48%) were the main drivers for switching refrigeration systems, rather than cost.
As new legislation comes in and is ratified, risk of supply and increased costs provide ample warnings for professionals to engage with boards and future-proof their cooling and refrigeration before its spirals and puts a dent on revenues.
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