IR Ingersoll Rand PLC

By Andrew Tangel and Ted Mann 

A global pact to limit planet-warming emissions is likely to force manufacturers of air conditioners and refrigerators to consider passing the additional cost of alternative coolants to consumers.

Global envoys agreed on Saturday to phase out hydrofluorocarbons from cooling appliances beginning in 2019. Meeting in Rwanda, major emitters including the U.S., China and India agreed to aim for an 80% reduction in their use by 2045.

Alternative coolants exist to power window-unit air conditioners, commercial chillers and household refrigerators, but many are unapproved for use in the U.S. Some are flammable. Manufacturers will have to convince regulators the new compounds are safe before retooling production.

"It's not going to be easy, but we're committed to doing it," said Stephen Yurek, chief executive of the Air-Conditioning, Heating, and Refrigeration Institute, a trade group.

Many companies anticipated that so-called HFCs would eventually be banned. They have collectively spent billions of dollars researching alternatives, Mr. Yurek said, adding that his group supported a global framework for coolant regulations.

The U.S. Environmental Protection Agency recently set deadlines to phase out HFCs in new appliances such as refrigerators by 2021 and in chillers by 2024. Industry groups have said those targets would hurt business.

"Our members are rushing right now to make sure that the alternative refrigerants are going to work, going to be safe," said Joe McGuire, chief executive of the Association of Home Appliance Manufacturers.

He said manufacturers want more time to harmonize guidelines related to refrigerants as well as new expected rules mandating greater energy efficiency. Meeting the 2021 refrigerator deadline, instead of the 2024 date the industry proposed, could collectively cost manufacturers an additional $230 million, he added.

"We don't want to have to do major redesigns twice within a couple-year period," Mr. McGuire said.

An EPA spokesman said: "While there will be some costs associated with transitioning to alternatives, we do not anticipate that this will pose a significant burden on industry -- particularly given the many commitments they have already made to move to climate-friendly alternatives."

Kevin Fay, executive director of the Alliance for Responsible Atmospheric Policy, an industry group that represents chemical companies and appliance makers, said retooling a chemical plant for a new coolant could cost more than $200 million. But consumer prices for appliances might eventually rise only as much as about 2%, as has been the case in previous coolant phaseouts, he said.

The phaseout could be a boon for makers of less-polluting HFC alternatives that are already on the market.

Honeywell International Inc. over the past few years has ramped up production of refrigerants that emit less greenhouse gas than HFCs.

A vice president from the company's Performance Materials & Technologies unit, Patrick Hogan, told investors at a conference in June that its "Solstice" line of refrigerants, aerosols and solvents would be "a $1 billion business in the next year."

Honeywell said is was designing as many offerings as possible in the Solstice line as "drop-ins," meaning they can be used by appliance and vehicle manufacturers with minimal design changes, which could help offset the higher cost of the new coolants. Some nine million vehicles are equipped with air conditioners using Honeywell's post-HFC refrigerant, the company said in June, and that number should double by the end of this year.

Honeywell has $3.4 billion in long-term agreements to supply Solstice chemicals to major car companies and appliance makers like Whirlpool Corp., Haier Electronics Group Co. and Midea Group Co. The company says government action to limit greenhouse-gas emissions in China and India could drive further growth in sales of these products.

Ingersoll-Rand PLC, the maker of Trane air-conditioning equipment, said it was testing a climate-friendly refrigerant alternative for small air conditioning systems that would require no additional engineering to use in existing systems.

Johnson Controls International PLC, the Milwaukee-based global manufacturing firm, recently introduced two building-cooling systems that use an alternative coolant made by Chemours Co., a Delaware company that was spun off from DuPont Co. last year. Laura Wand, Johnson Controls vice president of global chillers, said the coolant was chosen because it is nonflammable and significantly less harmful to the environment than other refrigerants.

Carrier Corp., a maker of air conditioners and refrigeration devices, said it has anticipated such an accord for nearly a decade. "We will continue to invent and deliver sustainable solutions that meet or exceed this agreement," said a spokeswoman for the Connecticut-based company's parent, United Technologies Corp.

Fomo Products, an Ohio manufacturer of spray-on insulation, said last year it intended to use more hydrofluoroolefin, a less-potent greenhouse gas than what HFCs emit. Fomo Products was acquired by Innovative Chemical Products Group in April.

Doug Mattscheck, chief executive of Innovative Chemical Products, said the new gas would have a material impact on insulation pricing. He wrote in an email that "the input materials for the HFO formulations are currently more expensive and the manufacturing process is more challenging." He added that he hoped that as production of HFO increases, costs for HFOs would be pushed down.

--Russell Gold and Bob Tita contributed to this article.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

October 16, 2016 21:56 ET (01:56 GMT)

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