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Adjustment Memo 

Analysis of HCFC-22 Servicing Needs in the U.S. Air 

Conditioning and Refrigeration Sector

Additional Considerations for Estimating Virgin Demand

Background

In December 2009, EPA published its final hydrochlorofluorocarbon (HCFC) allocation rule, “Protection 

of Stratospheric Ozone: Adjustments to the Allowance System for Controlling HCFC Production, Import, 

and Export,” (2009 Final Rule). That rule contained consumption and production allocations for HCFC-22, 

HCFC-142b and other HCFCs for the regulatory period of 2010 to 2014. As a result of the decision in 

Arkema v. EPA, which vacated the HCFC-22 and HCFC-142b allocations for 2011-2014, EPA published an 

interim final rule allocating HCFC-22 and HCFC-142b allowances for 2011. The proposed rulemaking that 

this memo accompanies proposes various options for providing HCFC-22 and HCFC-142b allowances in 

2012 through 2014. The HCFC allowance system is part of EPA’s Clean Air Act program to phase out 

ozone-depleting substances (ODS) and also supports U.S. compliance with the Montreal Protocol on 

Substances that Deplete the Ozone Layer. The most recent milestone of EPA’s HCFC phaseout schedule 

was on January 1, 2010, limiting the production and import of HCFC-142b and HCFC-22 to specified 

amounts significantly lower than limits set for 2003 through 2009. Between 2010 and 2020, the 

production and import of HCFC-22 is permitted to service existing refrigeration and air conditioning (AC) 

equipment.

The allocation levels in EPA’s 2009 Final Rule and 2011 Interim Final Rule were based in part on 

projections of HCFC-22 servicing demand, as estimated in The U.S. Phaseout of HCFCS: Projected 

Servicing Needs in the U.S. Air-Conditioning and Refrigeration Sector (known as the Servicing Tail 

Report). The report (1) examined the primary sources of HCFC-22 for the service of the installed base of 

refrigeration and AC equipment after 2010, (2) estimated the amounts of HCFC-22 recovered from 

equipment that could be subsequently recycled or reclaimed for reuse, and (3) based on these 

projections, estimated servicing demand for virgin HCFC-22. 

Since the 2009 Final Rule was published, the Agency has heard from stakeholders that the market for 

HCFC-22 has evolved. Stakeholders cite a number of factors that indicate a change in the market, 

including low HCFC-22 prices, increased reuse in certain end uses, increased installation of dry-shipped 

condensing units for repair, un-expended consumption allocations for HCFC-22 in past years, and 

reports of a potential surplus inventory of HCFC-22. Some of these factors have been identified in public 

comments by industry members. In addition to this information, the U.S. economy is in a dramatically 

different position than when the Servicing Tail Report was developed.
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This analysis summarizes industry feedback and suggests adjustments to the amount of modeled 

servicing demand for HCFC-22 in 2012 through 2014. In the proposed rule for 2012 through 2014, EPA is 

seeking comment on the assumptions EPA is making in this memo. 

Methodology Overview

The analysis uses EPA’s Vintaging Model to form the basis of quantitative estimates of current and 

projected HCFC-22 servicing demand, including from virgin and used sources. The Vintaging Model 

estimates the annual chemical emissions from industry sectors that have historically used ODS, including 

AC, refrigeration, foams, solvents, aerosols, and fire protection. Within these industry sectors, there are 

59 independently modeled end-uses. The model uses information on the market size and growth for 

each end-use, as well as a history and projections of the market transition from ODS to alternatives. As 

ODS are phased out, a percentage of the market share originally filled by the ODS is allocated to each of 

its substitutes. The model tracks emissions of annual “vintages” of new equipment that enter into 

operation by incorporating information on estimates of the quantity of equipment or products sold, 

serviced, and retired or retrofitted each year, and the quantity of the compound required to 

manufacture, charge, and/or maintain the equipment. EPA’s Vintaging Model uses this market

information to build an annual inventory of in-use stocks of equipment and the ODS and non-ODS 

substitutes in each end-use.

Estimates of HCFC-22 servicing demand from EPA’s Vintaging Model were the starting point for this 

analysis. Targeted industry research—through interviews and public submissions—was conducted to 

identify factors affecting the current market for HCFC-22. Then, overall servicing demand was adjusted 

to account for surplus inventory from past years and supplies of recovered refrigerant (either reclaimed 

or directly reused in the owner’s equipment). More detail is provided on these sources and adjustments 

in the sections that follow.

Projected HCFC-22 Servicing Needs

Refrigeration and AC equipment commonly requires servicing, which may include adding refrigerant to 

account for refrigerant losses that occur over time.1 While EPA banned the production and import of 

HCFC-22 for use in new appliances starting in 2010, the agency continues to allow limited production 

and import of virgin HCFC-22 to service appliances manufactured prior to January 1, 2010. 

Figure 1 presents projected HCFC-22 demand for servicing equipment in 2012, 2013, and 2014. These 

estimates were developed based on EPA’s Vintaging Model. As shown, approximately 56,200 metric 

tons (MT) of HCFC-22 will be required to service AC and refrigeration equipment in 2012, 51,200 MT in 

2013, and 45,900 MT in 2014. Residential AC represents the majority of HCFC-22 demand for 2012 to

2014. 

 

1

The servicing need estimates projected in this analysis include refrigerant to replace quantities that leak from 

operating equipment as well as losses that may occur while servicing operating equipment.
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HCFC-22 servicing demand projected in this analysis differs slightly from the demand presented in the 

2009 Servicing Tail Report and the 2009 Final Rule. These differences result from updates to the 

Vintaging Model. EPA’s Vintaging Model is periodically updated and peer-reviewed as new information 

is incorporated. Since the 2009 Final Rule, updates to unitary AC and water & ground-source heat pump 

growth rates, future growth rates, stock of refrigerated appliances, and residential unitary AC servicing 

emission rates were applied to produce these estimates.

Figure 1: 2012-2014 Demand for Servicing Refrigeration and AC Equipment, by End Use*

*"Other" refers to window units, packaged terminal units, dehumidifiers, water & ground source heat pumps, motor vehicle AC, 

small & medium retail food and mobile AC.

Sources of HCFC-22 for Servicing

As of 2010, only existing sources of HCFC-22 and a controlled quantity of virgin HCFC-22 (limited through 

allowance allocations distributed by EPA) are available to the AC and refrigeration industry to meet 

servicing demand. Existing sources, which can offset the need for virgin HCFC-22, include (1) recycled

HCFC-22, (2) reclaimed HCFC-22 and (3) imported, used HCFC-22. Previously-produced virgin material 

may have also been stored in inventory; this surplus inventory can also offset the need for additional 

virgin production and imports. HCFC-22 can also be obtained through inter-pollutant transfers of 

0

10,000

20,000

30,000

40,000

50,000

60,000

2012 2013 2014

Demand (M

T)

Year

Other

IPR

Large Retail Food Refrigeration

Cold Storage

Chillers

Large Commercial AC

Small Commercial AC

Residential AC
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allowances. Of the five sources described below, this analysis will focus on recycled and reclaimed HCFC22, as well as surplus inventory of virgin material.

 Recycled: Recycled HCFC-22 refers to material that has been extracted from an appliance and 

cleaned for reuse without meeting all the requirements for reclamation. EPA regulations allow 

for recharge of recycled refrigerants into the same piece of equipment or another piece of 

equipment with the same owner. EPA does not collect data on the amount of HCFC-22 that is 

recycled.

 Reclaimed: Refrigerants that are resold to be used in other equipment must be reclaimed to a 

standard level of purity based on the ARI Standard 700, to ensure sufficient purity of the 

reclaimed refrigerant. Certified reclaimers must report to EPA the total quantity of material sent 

to them each year for reclamation, the mass of refrigerant reclaimed that year and the mass of 

waste products generated that year.

 Surplus Inventory from Past Years: Refrigerants that are imported, produced or reclaimed in 

previous calendar years can be stored in inventory and sold in later years. This practice is 

possible at all levels of the refrigerant distribution chain (producers, distributors, technicians, 

etc.). 

 Used imports: Used HCFC-22 can be imported via EPA’s shipment-by-shipment petition process. 

The petition process ensures that HCFCs have been used (and were not newly produced) prior 

to import. Currently, the quantity of used HCFC-22 import is minimal and has not been included 

in this analysis.

 Inter-pollutant transfers of allowances: Another source of HCFC-22 can result from allowance 

holders transferring their allowances from one HCFC to HCFC-22, which EPA permits on an 

annual and ODP-weighted basis with a 0.1 percent deduction. Industry sources have indicated 

that the number of inter-pollutant transfers is low, so this factor has not been included in this 

analysis.

Adjusting for Additional Considerations to Estimate Virgin HCFC-22 

Demand

Based on new industry research, EPA could adjust servicing demand as modeled by the Vintaging Model 

to produce estimates that better reflect current and anticipated market conditions. These adjustments 

incorporate new information about (1) surplus inventory from past years, (2) the capacity of reclaimers 

to meet servicing demands, and (3) recovery and reuse of HCFC-22 in the large retail food sector (i.e., 

supermarkets), as described below.2A list of companies consulted for this analysis is provided at the end 

of this report.

 

2

Other factors may also influence servicing demand, but data were not readily available at the time of this writing 

to support quantitative adjustments. These factors might include a faster or slower transition out of HCFC-22 than 
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Exhibit 1: HCFC-22 Economics

Industry representatives report substantial 

reclamation capacity and access to 

recovered materials to meet a large 

proportion of servicing demand—as long as 

the price for virgin HCFC-22 increases 

sufficiently to provide a market incentive 

for recovery and reclamation. The fact that 

2010 HCFC-22 consumption allowances 

were not fully expended suggests that there 

is more than sufficient virgin HCFC-22 in the 

aftermarket, and that supply of virgin HCFC22 would have to decrease sizably to cause 

the price for virgin HCFC-22 to increase. 

Currently virgin HCFC-22 is priced at around

$4.50 per pound; some industry 

representatives suggest that this price 

would have to exceed $8.00 per pound for 

reclaimed HCFC-22 to become competitive, 

given reclamation costs associated with 

storage, handling, processing, and crosscontamination.

 Surplus Inventory Drawdown: Because HCFC22 inventory information is not officially 

reported to EPA, this analysis relies on 

estimates provided by industry. Feedback

suggests approximately 100 million pounds 

(45,400 MT) of surplus HCFC-22 from past 

years was in inventory at the end of 2010. Half 

of that figure (22,700 MT, or about six months

worth of demand) is comprised of packaged 

virgin HCFC-22 and the rest is bulk gas in large 

storage containers (e.g., ISO tanks). There is 

less certainty on the amount of bulk gas in 

inventory; various factors may have 

contributed. For example, industry contacts 

suggested that a cooler-than-anticipated 

summer in 20093 may have resulted in 

significant quantities going to inventory due to 

low servicing demands. Entities may also be 

holding virgin HCFC-22 produced prior to 2010 

in anticipation of higher prices in future years

or as preparation for the 2010 stepdown under 

the Montreal Protocol. 

This analysis assumes surplus inventory between 22,700 and 45,400 MT existed at the beginning 

of 2012. Given expectations about the transition away from HCFCs, as well as the 2015 and 2020 

HCFC phase-out milestones, it is estimated that the complete drawdown could take somewhere 

between four to eight years. This analysis also assumes that surplus inventory of virgin HCFC-22

will be drawn down at an annual rate of approximately 6,000 MT. This quantity is an average 

estimate given the ranges in amounts and potential drawdown periods. EPA is seeking comment 

on this assumption in the proposed rule for 2012 through 2014.

 Reclaimer Capacity Adjustment: In its 2009 Final Rule, EPA estimated that 12,500 MT of HCFC22 would be provided annually by recovery and reclamation through 2014. To date, reported 

reclaimed amounts have been lower, purportedly because of weak economic incentives. 

Specifically, the relatively low price of virgin HCFC-22 has challenged the economic viability of 

reclamation practices. However, recent interviews with reclaimers suggest that reclamation 

facilities have the technical capacity to meet a greater proportion of servicing demand, if the 

price is right (see Exhibit 1Error! Reference source not found.). A number of those interviewed 

 

originally anticipated. EPA is continually reviewing changes in the market and is updating the Vintaging Model 

accordingly.

3 While temperatures for the year were slightly higher than average in the contiguous U.S., NOAA reports that 

summer 2009 was cooler than usual (see NOAA: 2009 Global Temperatures Well Above Average; Slightly AboveAverage for U.S. Available at http://www.noaanews.noaa.gov/stories2009/20091208_globalstats.html).
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stated that reclaimers were currently operating significantly below capacity. Interviews suggest 

that anywhere from 25% to 80% of servicing demands could be met by increasing the utilization 

of existing machinery and increasing the number of operational shifts in a week. This analysis

uses 12,500 MT as a low bound for reclamation (consistent with the 2009 Final Rule), and 35% 

of total servicing demand in 2012 (19,700 MT) as the higher bound. EPA is seeking comment on 

this assumption in the proposed rule for 2012 through 2014.

 Large Retail Food Recovery and Reuse Adjustment: Industry sources suggest that recovery and 

direct reuse is a widespread practice amongst supermarkets; however, the extent of recovery 

and reuse can vary significantly between chains, depending largely on the extent to which 

supermarkets are converting their HCFC-22 equipment to alternatives. For example, some 

supermarkets that have converted a substantial proportion of their HCFC-22 equipment 

indicated that they have sufficient recovered HCFC-22 in stock for servicing such that they do 

not anticipate a need to purchase any more virgin material in the future. Other supermarkets 

that have not converted from HCFC-22 equipment as aggressively indicated that as low as 10% 

to 20% of their servicing needs are met by material recovered from retrofitted stores they own.

This analysis assumes that recovery and reuse can meet a range of 20% to 70% of the servicing 

needs of the large retail food sector. EPA is seeking comment on this assumption in the 

proposed rule for 2012 through 2014. Specifically, EPA is interested in learning if the percentage 

used in the final rule should be closer to 20% or 70%.

Table 1 summarizes the assumptions and adjustments that could be applied to the original HCFC-22 

servicing demand. Two scenarios are considered: a Larger Allocation Scenario and a Smaller Allocation 

Scenario. Under both scenarios, EPA would allocate fewer consumption allowances relative to the 2009 

Final Rule.

Table 1: Annual Adjustments to Total Servicing Demand

Adjustment Larger Allocation 

Scenario

Smaller Allocation 

Scenario

Assumed annual drawdown of surplus HCFC-22 inventory 6,000 MT 

(13% to 26% of total surplus per year)

Market-wide servicing demand met by reclaimed HCFC-22 12,500 MT 

(22% in 2012)

19,700 MT

(35% in 2012)

Servicing demand met by recovered HCFC-22 in the large 

retail food sector

1,100 - 1,600 MT

(20% per year)

3,800 - 5,500 MT

(70% per year)

Applying the adjustments shown in Table 1 results in a range of changes in servicing demand, which 

account for the portion of total demand that can be met through recovery and reuse, reclamation, and 

surplus drawdown. 

Table 2 shows how these adjustments yield new overall estimates of demand for virgin HCFC-22 from 

2012 through 2014. 
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Table 2: Results of Adjustments to HCFC-22 Servicing Demand (Metric Tons)

2012 2013 2014

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Total Servicing 

Demand (Vintaging 

Model)

56,200 51,200 45,900

Surplus Inventory 

Drawdown -6,000 -6,000 -6,000

Market-wide 

Servicing Demand 

Met by Reclaimed 

HCFC-22

-12,500 -19,700 -12,500 -19,700 -12,500 -19,700

Servicing Demand 

Met by Reused 

HCFC-22 in Large 

Retail Food 

Equipment

-1,600 -5,500 -1,300 -4,600 -1,100 -3,800

Total Adjustment -20,100 -31,200 -19,800 -30,300 -19,600 -29,500

Revised Allocation 36,200 25,100 31,400 20,800 26,300 16,400

Totals may not sum due to independent rounding.

Allocations for HCFC-22 from 2012 to 2014

Adjusting total servicing demand based on the above factors provides a new estimate of HCFC-22 virgin 

demand in 2012, 2013 and 2014. These new virgin demand estimates suggest that EPA should allocate 

fewer allowances for 2012 through 2014 than were provided in the 2009 Final Rule. 

Table 3 presents revised demand, the allowance levels in the 2009 Final Rule, and the percentage 

change in overall consumption allocations based on these values. As shown, a consumption allowance 

reduction of 11% to 38% is possible for 2012, 13% to 42% for 2013, and 15% to 47% for 2014.
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Table 3: Allocation Adjustment Relative to the 2009 Final Rule (Metric Tons)

2012 2013 2014

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

HCFC-22 Consumption 

Allowances in the 2009 

Final Rule

40,700 35,900 31,100

Revised Allocation 36,200 25,100 31,400 20,800 26,300 16,400

Percentage Allocation 

Change Relative to the 

2009 Final Rule

-11% -38% -13% -42% -15% -47%

Totals may not sum due to independent rounding.

Table 4 shows the possible allocation amounts for 2012 through 2014 as both an aggregate amount and 

percentage of baseline. The proposed HCFC-22 consumption baseline for 2012 through 2014 is 

141,864,931 kg. 

Table 4: Summary of Proposed Allocation Adjustments (Metric Tons)

2012 2013 2014

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Larger 

Allocation 

Scenario

Smaller 

Allocation 

Scenario

Revised Allocation 36,200 25,100 31,400 20,800 26,300 16,400

Percentage of Baseline 

Allocated

25.5% 17.7% 22.1% 14.7% 18.5% 11.6%

Totals may not sum due to independent rounding.
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List of Companies Consulted

Airgas Specialty Products Inc. Personal communication with ICF International. October 7, 2011.

Coolgas. Personal communication with ICF International. October 6, 2011.

Food Lion. Personal communication with ICF International. October 3, 2011.

Hudson Technologies Company. Personal communication with ICF International. October 7, 2011.

National Refrigerants, Inc. Personal communication with ICF International. October 12, 2011.

RemTec International. Personal communication with ICF International. October 4 and 17, 2011.

Supervalu. Personal communication with ICF International. October 5, 2011.

Weis Markets. Personal communication with ICF International. October 3, 2011.