Preliminary Cost Analysis for Regulatory Changes to 

the Listing Status of High-GWP Alternatives used in 

Refrigeration and Air Conditioning, Foams, and Fire 

Suppression

P REPARED FOR :

 Stratospheric Protection Division 

Office of Air and Radiation 

U.S. Environmental Protection Agency 

Washington, D.C. 20460 

P REPARED BY :

ICF International 

1725 Eye Street, NW 

Washington, DC 20006 

M ARCH 2016
1

Executive Summary

This analysis presents an estimate of the overall potential costs associated with a proposed rulemaking to 

change the listing status of certain high-GWP alternatives used in refrigeration and air conditioning, foams, and 

fire suppression. Exhibit 1 summarizes the regulatory changes analyzed. Using a 7% discount rate, total 

annualized compliance costs across the roughly 100 affected businesses are estimated to range from $59.2

million–$71.3 million. Using a 3% discount rate, total annualized compliance costs are estimated to range from 

$58.8 million–$70.6 million.

Methodology

This analysis builds on the general approach taken 

previously to estimate potential economic impacts on small 

businesses—as described in the Economic Impact Screening 

Analysis for Regulatory Changes to the Listing Status of 

High-GWP Alternatives used in Refrigeration and Air 

Conditioning, Foams, and Fire Suppression —to extend the 

assessment to all-sized businesses potentially affected by 

the rulemaking. Industries potentially affected by these 

regulatory changes were primarily identified by North 

American Industry Classification System (NAICS) codes.

Costs to affected businesses were calculated using a direct 

compliance cost method and then annualized. Costs or 

savings associated with changes in energy efficiency were 

not estimated because energy efficiency is related to a 

number of factors, including equipment design and

performance characteristics, and not just due to the 

refrigerant or foam blowing agent used.

Apart from a few exceptions, this analysis uses the same 

assumptions as the small business screening analysis, 

including those about: 

• Which industries might be affected by the regulatory changes;

• The proportion of businesses that could be directly affected by the regulatory changes, based on 

whether the HFCs, HFC blends, PFCs, and other halocarbons affected by the regulatory changes are 

still—or were ever—known to be in use, and what proportion of the market the affected substitutes are 

expected to represent at the time that the regulatory changes would come into effect; 

• The alternatives that are implemented in the transition away from the HFCs, HFC blends, PFCs, and 

other halocarbons affected by the regulatory changes, for modeling purposes; and 

• The capital, operating, maintenance, and other direct compliance costs incurred by affected businesses.

Table 1 provides the basic financial assumptions used in this analysis. 

Exhibit 1: Summary of Regulatory Changes Analyzed

• List unacceptable 24 HFCs and HFC blends for new 

centrifugal chillers in 2024.

• List unacceptable 24 HFCs and HFC blends for new 

positive displacement chillers in 2024.

• List unacceptable 24 HFCs and HFC blends for new 

refrigerated food processing and dispensing 

equipment in 2021.

• List unacceptable 28 HFCs and HFC blends for new 

household refrigerators and freezers in 2021.

• List unacceptable 22 HFCs and HFC blends for new 

cold storage warehouses in 2021.

• List unacceptable HFC-134a, HFC-245fa, and certain 

HFC blends in 1) rigid polyurethane high-pressure 

two component spray foam, 2) rigid polyurethane 

low -pressure two component spray foam, and 3) 

rigid polyurethane one-component foam sealants in 

2020, 2021, and 2020, respectively, except for certain 

military, space- and aeronautics- related applications. 

• List unacceptable methylene chloride in 1) flexible 

polyurethane foam 30 days from date of publication

of a final rule, 2) integral skin polyurethane foam in 

2017, and 3) polyolefin foam in 2020.

• List unacceptable perfluorocarbons (C3F8 and C4F10) in 

total flooding uses one year after publication of a 

final rule.
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Table 1: Financial Assumptions used in Cost Analysis

Parameter Assumption

Discount rates 3% and 7%

Constant Year Dollars 2015$

Lifetime for annualizing costs Varies based on equipment type: 25 years for foam manufacturing and 

centrifugal chiller manufacturer, and 20 years for household refrigerator and 

freezer manufacturers. 

The sections below briefly describe the cost assumptions to extend the small business economic impact 

screening assessment to those businesses not characterized as small under the Small Business Administration 

guidelines (hereafter referred to as “larger” businesses).

Refrigeration and Air Conditioning Assumptions

Cost assumptions for the refrigeration and air conditioning sector are summarized below; for more detail, see 

Economic Impact Screening Analysis for Regulatory Changes to the Listing Status of High-GWP Alternatives.

• Chillers (Centrifugal and Positive Displacement)—Nine manufacturers of centrifugal and positive 

displacement chillers were identified based on an internet search. Compliance costs incurred as a result 

of the proposed regulatory changes are based on the assumption that manufacturers would use R-450A

(a blend of HFC-134a and HFO-1234ze) or R-513A (a blend of HFC-134a and HFO-1234yf) in centrifugal 

chillers in place of HFC-134a; SolsticeTM-1233zd(E) in low-pressure centrifugal chillers in place of HFC245fa (or centrifugal chillers that historically used HCFC-123); and R-450A or R-513A in positive 

displacement chillers in place of R-407C and R-410A.1 It is assumed that there is a one-time capital cost 

of approximately $51,000 associated with transitioning to SolsticeTM-1233zd(E) (UNEP 2012), and annual

costs of $3,500 to $4,200 for centrifugal chillers and $1,100 to $1,400 for positive displacement chillers

using R-450A or R-513A, and $7,800 to $8,500 for centrifugal chillers using SolsticeTM-1233zd(E),

associated with charging the systems.

2 As a result, it is estimated that each manufacturer of centrifugal 

chillers and positive displacement chillers could incur an annual cost of roughly $2.9 million to $3.3

million and roughly $3.0 million to $3.8 million, respectively, as a result of the proposed regulatory 

changes.3

• Retail Food Refrigeration (Food Processing and Dispensing Equipment)—Based on an internet search, it 

is assumed that there are 20 manufacturers of refrigerated food processing and dispensing equipment 

 1 The Vintaging Model assumes that by 2024, new positive displacement chillers no longer use HFC-134a (EPA 2014). 2 Chiller compressors can be charged at the manufacturing facility, shipped partially charged and filled on-site, or shipped 

dry and filled on site depending on the size and installation location of the system. For the purposes of this analysis, it is 

assumed that all charging costs will be incurred by the manufacturer, although it is likely that some of these costs would be 

passed on to the end-user. 3 Annual costs are based on the assumption that manufacturers on average sell roughly 545 centrifugal chillers and 2,681

positive displacement chillers each year that will require transition to an alternative refrigerant. Approximately 41% of new 

chillers are assumed to transition to SolsticeTM-1233zd(E) and 59% are expected to transition to R-450A or R-513A. These 

assumptions are based on 2024 sales of centrifugal chillers and positive displacement chillers estimated by EPA’s Vintaging 

Model (EPA 2014).
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in the United States. Compliance costs incurred as a result of the proposed regulatory changes are based 

on the assumption that manufacturers of refrigerated food processing and dispensing equipment will 

incur an incremental cost of $4-5 for each piece of equipment they produce associated with using R450A in low temperature applications in place of R-404A (UNEP 2012; Alpine Freezer 2015). With units 

estimated to sell for $10,000 a piece on average, manufacturers are estimated to incur on average an 

annual incremental cost of roughly $200-$200,000, depending on the size of the firm.4

• Household Refrigerators and Freezers—According to the U.S. Census Bureau (2012), there are 23 

manufacturers of domestic refrigeration equipment. Compliance costs incurred as a result of the 

proposed regulatory changes are based on the assumption that small businesses will transition from 

HFC-134a to either R-450A or R-513A, and large businesses will transition to isobutane (R-600a).

Assuming an average charge size of 0.16 kg (EPA 2014), it is estimated that small business 

manufacturers will incur an annual cost of roughly $1,400 to $1.7 million, depending on the size of the 

firm, associated with the incremental cost of the refrigerant.

5,6 Large business manufacturers are 

assumed to incur a one-time capital investment cost of $150,000 to $500,000 associated with (a) 

purchasing new charging equipment, (b) testing and certifying equipment to UL standards, and (c) 

converting their facilities to accommodate a flammable refrigerant, resulting in an annualized cost of 

about $31,000 to $102,000 per affected large business.

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• Cold Storage Warehouses—Given this industry’s reliance on ammonia, it is estimated that only four 

manufacturers produce R-404A and R-507A cold storage refrigeration systems in the United States. In 

response to the proposed regulatory changes, these manufacturers are assumed to transition to R-407F 

in new systems, which will cost each manufacturer $20,000 to $40,000 per year, due to the larger 

charge size of R-407F required (i.e., 1.07 times greater than the charge sizes of R-404A and R-507A 

systems) (Honeywell 2012).8

Foam Blowing Assumptions

In the foams sector, compliance costs generally include one-time capital costs for a production facility to 

transition to an alternative blowing agent. In some cases, these capital costs could be offset by annual savings 

associated with lower alternative blowing agent costs; however, these savings are not accounted for in this 

 4 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it is 

possible that some of these costs would be passed on to the end-user. 5 Annual costs are based on 2021 estimated sales of household refrigerators and freezers (approximately 11 million units) 

using EPA’s Vintaging Model (EPA 2014). This analysis assumes that refrigerator sales are proportionally distributed among 

manufacturers based on average sales across each establishment size category. 

6 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it is 

possible that some of these costs would be passed on to the end-user. 7 Using a 7% discount rate. 

8 For the purposes of this analysis, it is assumed that all refrigerant costs will be incurred by the manufacturer, although it is 

possible that some of these costs would be passed on to the end-user.
4

direct compliance cost approach. Assumptions are briefly described below; for more detail, please see Economic 

Impact Screening Analysis for Regulatory Changes to the Listing Status of High-GWP Alternatives.

• High-pressure two-component spray foam—It is assumed that companies still using HFC-245fa, HFC365mfc and blends thereof would transition to SolsticeTM Liquid Blowing Agent (LBA) 1233zd(E), trans-1-

chloro-3,3,3-trifluoroprop-1-ene). Capital costs for transitioning to SolsticeTM LBA are assumed to be 

$200,000–$300,000 per facility, associated with the cost of formulation development and compliance 

testing, which results in an annualized cost of about $20,000 to $70,000 per affected business.

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• Low-pressure two-component spray foam—Companies still using HFC-134a, HFC-245fa, and blends 

thereof are assumed to transition to SolsticeTM Gaseous Blowing Agent (GBA) (HFO-1234ze).Capital costs 

for transitioning to HFO-1234ze are assumed to be $500,000–$600,000 per facility to cover the cost of 

extensive formulation development and compliance testing, which results in an annualized cost of about 

$40,000 to $175,000 per affected business.

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• One-component foam sealants—Companies still using HFC-134a and blends thereof are expected to 

transition to SolsticeTM GBA (HFO-1234ze). Capital costs for transitioning to HFO-1234ze are assumed to 

be $200,000–$300,000 per facility to cover the cost of formulation development and compliance 

testing, which results in an annualized cost of about $20,000 to $70,000 per affected business.

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• Flexible polyurethane foam—Methylene chloride is not known to be used in any flexible polyurethane 

(PU) foam applications. Therefore, prohibiting the use of methylene chloride in this end-use is not

expected to impact any businesses. The proposed regulatory changes would serve to prevent uptake of 

methylene chloride into this foam end-use.

• Integral skin polyurethane foam—Methylene chloride is not known to be used in any integral skin PU 

foam applications. Therefore, prohibiting the use of methylene chloride in this end-use is not expected 

to impact any businesses. The proposed regulatory changes would serve to prevent uptake of 

methylene chloride into this foam end-use. 

• Polyolefin foam—Methylene chloride is not known to be used in any polyolefin foam applications. 

Therefore, prohibiting the use of methylene chloride in this end-use is not expected to impact any 

businesses. The proposed regulatory changes would serve to prevent uptake of methylene chloride into 

this foam end-use.

Fire Suppression and Explosion Protection Assumptions

No businesses are assumed to be affected by the proposed regulatory changes. PFCs (i.e., C3F8 and C4F10) are not 

used currently in new fire extinguishing equipment. These assumptions are based on modeling by EPA’s 

 9 Using a 7% discount rate. The range in annualized costs is dependent on the average number of establishments per 

business, which varies depending on the size of the business. 10 Ibid. 11 Ibid.
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Vintaging Model, which is informed by industry input. The Vintaging Model estimates that 0.2% of the market 

uses HFC-23 in total flooding systems in 2015, with the remaining using halon 1301, other HFCs (e.g., HFC227ea), and agents with zero ODP and low GWP, including fluoroketone, inert gas, CO2, powdered aerosols, 

foam, and water mist (EPA 2014). 

Results

Using the methodology and additional assumptions described above, Table 2 below summarizes the estimated 

number of businesses potentially affected by the proposed regulatory options as well as the estimated

annualized costs by sector at a 7% discount rate. Table 3 summarizes the estimated annualized costs by sector at 

a 3% discount rate. 

Using a 7% discount rate, total annualized compliance costs across affected businesses are estimated to range 

from $59.7 million–$71.9 million. Using a 3% discount rate, total annualized compliance costs across affected 

businesses are estimated to range from $59.3 million–$71.2 million. This analysis assumes the minimum cost to 

comply with the proposed regulatory changes. Emissions reductions associated with the regulated community’s 

compliance with these changes were also investigated.

12

 12 See EPA 2016, ‘Climate Benefits of the Proposed SNAP Program Status Change Rule’.
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Table 2: Estimated Compliance Cost of the Regulatory Changes using a 7% Discount Rate

Sector

Estimated Number of 

Businesses Impacted 

by the Rulea

Higher Lower

Annualized Costsb Annualized Costsb

Refrigeration and Air Conditioning 50 $69,878,000 $58,288,000

Centrifugal Chillers <10$29,365,000 $25,892,000

Positive Displacement Chillers $33,799,000 $27,039,000

Food Processing and Dispending Equipment 20 $419,000 $335,000

Household Refrigerators and Freezers 20 $5,810,000 $4,678,000

Cold Storage Warehouses <10 $142,000 $69,000

Foams 50 $2,026,000 $1,452,000

High-Pressure Two-Component Spray Foam 40 $1,414,000 $943,000

Low-Pressure Two-Component Spray Foam <10 $606,000 $505,000

One-Component Foam <10 $6,000 $4,000

Flexible Polyurethane Foam 0 $0 $0

Integral Skin Polyurethane Foam 0 $0 $0

Polyolefin Foam 0 $0 $0

Fire Suppression 0 $0 $0

Total Flooding 0 $0 $0

ALL SECTORS 100 $71,904,000 $59,739,000

Totals may not sum due to independent rounding.

a It is possible that some businesses will be affected for multiple types of equipment, resulting in a lower total number of discrete 

businesses affected by the rule. However, since it is not known how many businesses would be affected by multiple equipment types, 

the total maximum number of businesses that could be affected is shown.

b Includes annualized upfront capital costs as well as recurring annual costs.
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Table 3: Estimated Compliance Cost of the Regulatory Changes using a 3% Discount Rate

Sector

Estimated Number of 

Businesses Impacted 

by the Rule

Higher Lower

Annualized Costsa Annualized Costsa

Refrigeration and Air Conditioning 50 $69,659,000 $58,213,000

Centrifugal Chillers <10

$29,352,000 $25,879,000

Positive Displacement Chillers $33,799,000 $27,039,000

Food Processing and Dispending Equipment 20 $419,000 $335,000

Household Refrigerators and Freezers 20 $5,604,000 $4,616,000

Cold Storage Warehouses <10 $142,000 $69,000

Foams 50 $1,560,000 $1,118,000

High-Pressure Two-Component Spray Foam 40 $1,089,000 $726,000

Low-Pressure Two-Component Spray Foam <10 $467,000 $389,000

One-Component Foam <10 $5,000 $3,000

Flexible Polyurethane Foam 0 $0 $0

Integral Skin Polyurethane Foam 0 $0 $0

Polyolefin Foam 0 $0 $0

Fire Suppression 0 $0 $0

Total Flooding 0 $0 $0

ALL SECTORS 100 $71,219,000 $59,331,000

Totals may not sum due to independent rounding. a Includes annualized upfront capital costs as well as recurring annual costs.
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References

The following references are cited in this memorandum; see also Economic Impact Screening Analysis for 

Regulatory Changes to the Listing Status of High-GWP Alternatives used in Refrigeration and Air Conditioning, 

Foams, and Fire Suppression for a full list of references used for this analysis.

Alpine Freezer. 2015. Soft Serve Machines. Available online at: http://www.alpinefreezer.com/soft-servemachines/. Accessed November 2, 2015.

DuPont. 2014. Opteon XP10: Product Information Bulletin Low GWP Replacement for R-134a. Available online 

at: https://www.chemours.com/Opteon_Stationary/en_GB/assets/downloads/opteon-xp-10-pib.pdf

Environmental Protection Agency (EPA). 2013. Global Mitigation of Non-CO2 Greenhouse Gases: 2010-2030 

Available online at: http://www.epa.gov/climatechange/Downloads/EPAactivities/MAC_Report_2013.pdf. 

Environmental Protection Agency (EPA). 2014. Vintaging Model, Version VM IO File v4.4_10.13.14.xls

Environmental Protection Agency (EPA). 2016. Climate Benefits of the Proposed SNAP Program Status Change 

Rule.

Honeywell. 2015. Solstice® N13 (R-450A) Refrigerant: Low GWP HFO Blend Alternative for R-134a. Available 

online at: http://www.honeywell-refrigerants.com/europe/wp-content/uploads/2015/04/HoneywellSolstice-N13-Brochure.pdf. 

Honeywell. 2012. HFC Retrofit Guidelines – HFC-404A & HFC-507 to HFC-407F. Available online at:

http://www.honeywell-refrigerants.com/india/?document=hfc-retrofit-guide-focuses-on-converting-404aand-507-to-lt&download=1.

United Nations Environment Programme (UNEP). 2010. 2010 Report of the Refrigeration, Air Conditioning and 

Heat Pumps Technical Options Committee. Available online at: 

http://www.ozone.unep.org/Assessment_Panels/TEAP/Reports/RTOC/RTOC-Assessment-report-2010.pdf

United Nations Environment Programme (UNEP). 2012. Report of the Technology and Economic Assessment 

Panel, Additional Information on Alternatives to Ozone Depleting Substances. Available online at: 

http://ozone.unep.org/Assessment_Panels/TEAP/Reports/TEAP_Reports/teap-task-force-XXIII-9-reportmay2012.pdf. 

U.S. Census Bureau. 2012. 2012 County Business Patterns. Number of Firms, Number of Establishments, 

Employment, and Annual Payroll by Enterprise Employment Size for the United States, All Industries: 2012. 

Retrieved November 3, 2015 from: http://www.census.gov/econ/susb/

The White House. 2015. FACT SHEET: Obama Administration and Private-Sector Leaders Announce Ambitious 

Commitments and Robust Progress to Address Potent Greenhouse Gases. Available online at: 

https://www.whitehouse.gov/the-press-office/2015/10/15/fact-sheet-obama-administration-and-privatesector-leaders-announce.