Refrigerant Reclaim Australia (RRA) general manager, Michael Bennett, talks to CCN about the end of the Destruction Incentives Program and the impact of the carbon tax on product stewardship in Australia. He also engages in a little crystal ball gazing, sharing his insights on the changing refrigerant landscape over the next decade.
The Federal Government has announced plans to abolish the Destruction Incentives Program on June 30, 2014, in
line with the repeal of the carbon tax. But legislation is yet to pass both houses of parliament. Until then, no firm
date can be set for the removal of the program or the tax.
The program provides an additional $1.50 rebate for ozone depleting substances (ODS) and synthetic greenhouse gas
(SGG) refrigerant sent to RRA for destruction. With so much activity taking place, CCN thought it would be an ideal time to get the latest news directly from the RRA.
CCN: So Michael, what’s been happening in the world of refrigerant recovery?
Michael Bennett: The collections of contaminated and unwanted recovered refrigerant have certainly slowed but we
are on the verge of a significant milestone. Hopefully, by the time everyone reads this, we will have exceeded 5,000 tonnes of waste refrigerant taken back and destroyed.
That is a great achievement by the whole industry; the technicians, the contractors, and the wholesalers. You know, most refrigerant is recovered in relatively small amounts so to surpass the 5,000 tonne mark has required a massive long-term effort. That constant work is really important from an environment protection perspective.
Collectively, through the product stewardship program, the industry has reduced the amount of stratospheric ozone destroyed by more than 10 million tonnes and prevented the emission of more than 10 million tonnes of carbon dioxide equivalent.
That’s on top of the savings made by recycling and reusing, and by the substantial reduction in leakage rates.
CCN: What sort of impact has the carbon tax had on the amount of refrigerant being collected by the product
stewardship program?
Bennett: We expected a severe reduction in collections once the carbon tax was introduced. When you triple and quadruple the price of a product, it changes the nature of the market. As can be seen in Figure 2 titled Monthly Recoveries, the average monthly volume has dropped from nearly 50 tonnes in 2011 to about 20 tonnes now.
The much increased value of refrigerant has led to the retention and reuse of increasing quantities of various types of refrigerants but it is the R22, an HCFC not subject to the carbon tax, that has almost disappeared from our recovered refrigerant stream. It’s one of the more interesting unintended consequences of the carbon tax.
RRA fully supports the recovery, recycling, reclamation and reuse of refrigerant as long as it meets the correct
specifications. There is broad concern that some of the refrigerants being recovered and reused may not be of the best quality and there will be consequences if this is the case. However, recovering and reusing quality refrigerant needs to be
encouraged. When it is contaminated or of an unwanted type, send it to RRA for safe disposal.
CCN: Has the extra $1.50 per kilogram provided by the government's Destruction Incentives Program made a
difference?
Bennett: I expect the architects of the program would be a little disappointed with the results. There was plenty of goodwill and a desire to return some of the funds raised by the carbon tax back to the market. While the government incentive increased the rebate by 50 per cent from $3.00 to $4.50 per kilogram, it was rather drowned out by the percussion of the price increases of refrigerants in the marketplace.
CCN: You’ve said that the consequences of the carbon tax have placed strong downward pressure on returns. Will the reverse be true when the carbon tax is removed? Will recovery go back up to where it was?
Bennett: Yes, we expect receipts of recovered contaminated and unwanted refrigerant to commence growing once the carbon tax has been removed. There is likely some considerable volume of recovered refrigerant being stored around the country at various levels of the refrigerant chain. This refrigerant will be held with a thought to having it recycled or reclaimed for reuse.
Once the pricing of refrigerant comes back to more realistic levels, some of the more contaminated volume of this stored refrigerant will start to flow back through our collection system. Just when this might occur is a difficult question to answer. The government clearly intends to remove the carbon tax from July 1 this year but passage through the Senate remains uncertain. We, along with everyone else, will have to wait and see.
CCN: As you say, the next year looks very uncertain but what might happen in the years beyond? What does your
crystal ball tell us?
Bennett: Well, there are some things that we are pretty certain will happen, or that are happening now. R22 is being
phased out and will become a redundant refrigerant by the end of this decade.
It will be in high demand and a lot of recovery and reuse will occur over the next couple of years. But then, as R22
equipment reaches end-of-life, there will be largely unwanted surpluses that will need to be destroyed. A similar pattern may be seen for both R410A, which is being replaced by R32, and for R134a where there is a high likelihood of replacement by R1234yf.
These transitions to lower and effectively zero global warming potential (GWP) refrigerants create the potential for
further high volume redundancies. R22, R134a, and R410A make up about 90 per cent of the installed bank of refrigerant, some 39,000 tonnes. As the industry transitions away from the ozone depleting and higher GWP products, there will be a large amount of unwanted refrigerants requiring recovery and safe disposal to prevent its emission to the atmosphere and
consequent degradation of the environment.
It will be a mammoth task and RRA is well positioned to meet the challenge.