### United States
Environmental Protection Agency Office of Air and Radiation (6205J) EPA 430-R-04-006
June 2004



# Analysis of Costs to Abate International Ozone-Depleting Substance Substitute EmissionsAnalysis of Costs to Abate International ODS Substitute Emissions

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## Acknowledgements

This report was produced by the Alternatives and Emi ssions Reduction Branch of the U.S. EPA’s Office of Air and Radiation, Office of Atmospheric Program s. Key staff from the Office of Air and Radiation who worked on this report include Erin Birgfeld , Jeanne Briskin, Jeff Cohen, Dave Godwin, Anhar Karimjee, Colm Kenny, Suzanne Kocchi, Bella Marani on, Scott Monroe, Margaret Sheppard and Deanne Upson.

The report would not have been complete without the efforts and contributions of many individuals and organizations. Much of the underlying assumptions a nd data used in the analysis were provided by numerous people and companies cited throughout the re port. In addition, many individuals provided a peer review of the particular chapter matching his or her expertise. These individuals include: Paul Ashford, Ward Atkinson, Dave Ba teman, Donald Bivens, Nick Cam pbell, Jim Crawford, Hugh Crowther, William Dietrich, Tony Digmanese, Maureen Hardwi ck, Kenneth Hickman, William Hill, John Owens, Eugene Smithart, William Walter, Kert Werner, and R obert Wickham. This review does not constitute endorsement by the person or his/her employer of the results or conclusions of this report.

The staff of the Energy Policy and Programs Practic e at ICF Consulting deserves special recognition for their expertise, efforts in preparing many of the in dividual analyses, and for synthesizing this report.
These individuals include: Mollie Averyt, Philip Groth, Daniel Lieberman, Marian Martin Van Pelt, Pamela Mathis, Iliriana Mushkolaj, La uren Pederson, and Katrin Peterson.

Questions concerning this report should be directed to:

David S. Godwin, P.E. Environmental Engineer
Alternatives and Emissions Reduction Branch Global Programs Division U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, NW
Mail Code 6205J Washington, D.C. 20460 1-202-343-9324 (phone) 1-202-343-2363 (fax) Godwin.Dave@epa.govAnalysis of Costs to Abate International ODS Substitute Emissions

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## Table of Contents

Acknowledg ements ............................................................................................................... ......................i
Table of Contents.............................................................................................................. ..........................ii
List of Tables ................................................................................................................. .............................iii
Executive Summary.............................................................................................................. ................ES-1

1 Analysis of Costs to Abate International HFC Emissions from Refrigeration and AirConditioning ................................................................................................................... .............................1
1.1 Introduction................................................................................................................... ..................1
1.2 Baseline Emissi on Estimates .................................................................................................... .....5

1.2.1 Emission Estimati ng Metho dology ..........................................................................................5
1.2.2 Baseline Emissions ............................................................................................................. ..10
1.3 Costs of HFC Emission Reducti on from Refrig eration/AC ...........................................................11

1.3.1 Description and Cost Analysis of Abat ement Options...........................................................11
1.3.2 Calculation of Indirect Emissions and Cost s for Options Applicable to Stationary Equipment...................................................................................................................... ......................34
1.3.3 Summary of Technical Applicability and Market Penetration of Abatement Options............36
1.4 Results........................................................................................................................ ..................41
1.5 Summa ry ........................................................................................................................ ..............42
1.6 References ..................................................................................................................... ..............43

2 Analysis of Costs to Abate Internat ional HFC Emissions from Aerosols ...................................49

2.1 Introduction................................................................................................................... ................49
2.2 Baseline Emissi on Estimates .................................................................................................... ...50

2.2.1 Emission Estimati ng Metho dology ........................................................................................50
2.2.2 Baseline Emissions ............................................................................................................. ..51
2.3 Costs of HFC Emission Re ductions for Aerosols.........................................................................51

2.3.1 Description and Cost Analysis of Abat ement Options...........................................................52
2.3.2 Summary of Technical Applicability and Market Penetration of Abatement Options............56
2.4 Results........................................................................................................................ ..................57
2.5 Summa ry ........................................................................................................................ ..............58
2.6 References ..................................................................................................................... ..............59

3 Analysis of Costs to Abate Intern ational HFC Emissi ons from Foams .......................................61

3.1 Introduction................................................................................................................... ................61
3.2 Baseline Emissi on Estimates .................................................................................................... ...62

3.2.1 Emission Estimati ng Metho dology ........................................................................................62
3.2.2 Baseline Emissions ............................................................................................................. ..64
3.3 Costs of HFC Emission Re ductions from Foams.........................................................................64

3.3.1 Description of Abat ement Options.........................................................................................64
3.3.2 Description of Abat ement Options.........................................................................................67
3.3.3 Summary of Technical Applicability and Market Penetration of Abatement Options............85
3.4 Results........................................................................................................................ ..................90
3.5 Summa ry ........................................................................................................................ ..............92
3.6 References ..................................................................................................................... ..............93

4 Analysis of Costs to Abate International HFC and PFC Emissions from Fire Extinguishing....96

4.1 Introduction................................................................................................................... ................96
4.2 Baseline Emissi on Estimates .................................................................................................... ...98

4.2.1 Emission Estimati ng Metho dology ........................................................................................98
4.2.2 Baseline Emissions ............................................................................................................. ..99
4.3 Costs of HFC and PFC Emi ssion Reductions from Fire Extingui shing......................................100

4.3.1 Description and Cost Analysis of Abat ement Options.........................................................101
4.3.2 Summary of Technical Applicability and Market Penetration of Abatement Options..........110
4.4 Results........................................................................................................................ ................112
4.5 Summa ry ........................................................................................................................ ............112
4.6 References ..................................................................................................................... ............113Analysis of Costs to Abate International ODS Substitute Emissions

-iii5 Analysis of Costs to Abate Internationa l HFC and PFC Emissions from Solvents ..................116

5.1 Introduction................................................................................................................... ..............116
5.2 Baseline Emissi on Estimates .................................................................................................... .117

5.2.1 Emission Estimati ng Metho dology ......................................................................................117
5.2.2 Baseline Emissions ............................................................................................................. 118
5.3 Cost of HFC and PFC Emission Reductions fo r Solvents..........................................................119

5.3.1 Description and Cost Analysis of Abat ement Options.........................................................119
5.3.2 Summary of Technical Applicability and Market Penetration of Abatement Options..........125
5.4 Results........................................................................................................................ ................126
5.5 Summa ry ........................................................................................................................ ............127
5.6 References ..................................................................................................................... ............127 Appendices



## List of Tables

Table 1-1: Percent of On-Road Vehicle Fleet Assume d to Have Operational Air-Conditioning Units..........8 Table 1-2: Estimated Percent of Refrigeration/Air- Conditioning HFC Emissions Attributable to MVACs ....9 Table 1-3: Distribution of Refrig eration and Air-Conditioning Sector HF C Emissions by End-use, Region,
and Year ....................................................................................................................... .........................9 Table 1-4: Baseline HFC Emission Estimates from Refrigeration and Air-Conditioning (MMTCE)............10 Table 1-5: Assumptions on Duration and App licability of Emission Reduction Options.............................13 Table 1-6: Summary of Assumptions for Leak Repair for Large Equi pment ..............................................15 Table 1-7: Summary of Assumptions for Re covery/Recycling from Small E quipment...............................17 Table 1-8: Summary of Assumptions for Distri buted Systems for New St ationary Equipment ..................21 Table 1-9: Summary of Assumptions for HFC Seco ndary Loop Systems for New Stationary Equipment.23 Table 1-10: Summary of Assumptions for Amm onia Secondary Loop Systems for New Stationary Equipment...................................................................................................................... ......................25 Table 1-11: Summary of Assumptions for E nhanced HFC-134a System s for New MVACs......................26 Table 1-12: Summary of Assumptions for HFC-152a DX Systems in New MVACs...................................28 Table 1-13: Summary of Assumptions for CO 2 Systems in New MVACs...................................................31 Table 1-14: Net Annual Emissions and Energy Costs of Replacement Options in the United States in a 600,000 Square Fo ot Supermarket ................................................................................................ .....35 Table 1-15: Summary of Technical Applicabilit y of Abatement Options by Region, Percent a ....................37
Table 1-16: Incremental Maximum Market Penetration of Technology Options into New Equipment by Region, Expressed as a Percent of Emissions fr om New Refrigeration/Air-Conditioning Equipment a 38
Table 1-17: Incremental Maximum Market Penetration of All Abatement Options by Region, Expressed as a Percent of Total Refrigerati on/Air-Conditioni ng Emissions...............................................................39
Table 1-18: Percent Reduction off Baseline Emis sions of All Abatement Options by Region ...................40
Table 1-19: United States Emission Reductions in 2020 and Break-Even Costs for Refrigeration and AirConditi oning................................................................................................................... ......................41 Table 1-20: Non-U.S. Annex I Emission Reductions in 2020 and Break-Even Costs for Refrigeration and
Air-Conditi oning ............................................................................................................... ....................42
Table 1-21: Non Annex I Emission Reductions in 2020 and Break-Even Costs for Refrigeration and AirConditi oning................................................................................................................... ......................42 Table 2-1: Baseline HFC Emission Estima tes from MDI Aerosols (MMTCE) ............................................51
Table 2-2: Baseline HFC Emission Estimate s from Non-MDI Aero sols (MMTCE).....................................51 Table 2-3: Technical Applicability and Incremental Maximum Market Penetration of Aerosol Options (Percent) ...................................................................................................................... ........................56 Table 2-4: Emission Reductions off the Total Applicable Aerosols Baseline (Percent)..............................57 Table 2-5: United States Emi ssion Reductions in 2020 and Brea k-Even Costs fo r Aerosols....................57 Table 2-6: Non-U.S. Annex I Em ission Reductions in 2020 and Brea k-Even Costs fo r Aerosols..............58
Table 2-7: Non Annex I Emissi on Reductions in 2020 and Brea k-Even Costs fo r Aerosols......................58 Table 3-1: U.S. EPA’s Vintaging Model Emi ssions Profile for t he Foams Se ctor.......................................63
Table 3-2: Baseline Em issions in MMTCE......................................................................................... .........64 Table 3-3: Base Case Assumptions for a Contractor Using HFC- 134a ....................................................67Analysis of Costs to Abate International ODS Substitute Emissions

-ivTable 3-4: Assumptions and cost s used in the cost analysis to substitute HFC-134a Hydrocarbons.......68 Table 3-5: Base Case Assumptions for a Contractor Using HFC- 134a and HF C-152a............................69 Table 3-6: Assumptions and costs used in the cost an alysis to substitute HFC-134a with Hydrocarbons 70 Table 3-7: Assumptions and costs used in the cost an alysis to substitute HFC-152a with Hydrocarbons 71 Table 3-8: Base Case Assumptions for a Hypothetical Contractor Using HFC-134a/CO 2 (LCD) .............72 Table 3-9: Assumptions and costs used in t he cost analysis to substitute HFC-134a/CO 2 with CO 2 .........73 Table 3-10: Assumptions and costs used in the cost analysis to substitute HFC-134a/CO 2 with CO 2 /Alcohol....................................................................................................................... ...................74 Table 3-11: Base Case Assumptions for a Hypot hetical Spray Foam Contractor Using HFC-245fa/CO 2 (water)........................................................................................................................ ..........................74 Table 3-12: Assumptions and costs used in the cost analysis to substitute HFC-245fa/CO 2 (water) with CO 2 (water)........................................................................................................................ ...................76 Table 3-13: Assumptions and costs used in the cost analysis to substitute HFC-245fa/CO 2 (water) with Hydrocarbons................................................................................................................... ....................77 Table 3-14 General Assumptions Appl icable Both End-of -Life Op tions ....................................................81 Table 3-15 Assumptions Applicable to the M anual Process with Fo am Incineration ................................81 Table 3-16 Assumptions Applicable to the Au tomated Process with Foam Landfilling.............................81
Table 3-17: Automated Pr ocess with Fo am Landfilling ........................................................................... ..84
Table 3-18: Manual Process with Foam In cineration............................................................................. ....85 Table 3-19: Reduction Efficiency of Foam Option s (Perc ent)..................................................................... 85 Table 3-20: Technical Applicability of Foam Opti ons for the US, Europe, and Japan (Percent)................86 Table 3-21: Technical Applicability of Foam Options fo r the CEITs, China, and the Rest of the Developed World (Per cent)................................................................................................................ ....................87
Table 3-22: Incremental Maximum Market Penetration Expressed as Percent of New Emissions for which the Options are Tec hnically Applicable......................................................................................... .......88
Table 3-23: Incremental Maximum Market Penetration Expressed as Percent of All Emissions for which the Options are Tec hnically Applicable......................................................................................... .......89 Table 3-24: Emission Reductions off Total Foams Ba seline for the US, Europe, and Japan (Percent) ....90
Table 3-25: Emission Reductions off Total Foams Ba seline for the CEITs, China, and the Rest of the Developed World (Percent) ...................................................................................................... ...........90 Table 3-26: Emission Reductions in 2020 and Co sts of Abatement for Foams in the US .........................91 Table 3-27: Emission Reductions in 2020 and Costs of Abatement for Foams in the non-US Annex I
Countries...................................................................................................................... ........................91 Table 3-28: Emission Reductions in 2020 and Costs of Abatement for Foams in non-Annex I Countries 92
Table 4-1: Baseline HFC and PFC Emission Esti mates from Fire Exti nguishing ( MMTCE) ...................100
Table 4-2: Assumed Breakout of Total GWP-Weighted Baseline Fi re Extinguishing Emissions.............100 Table 4-3: Summary of Technical A pplicability of Abat ement Opti ons.....................................................110 Table 4-4: Incremental Maximum Market Penetration, Expressed as Percent of Annual Installation of New Class A or Clas s B Systems ..................................................................................................... .........110
Table 4-5: Incremental Maximum Market Penetration Expressed as Percent of Entire Installed Base (Class A or Class B)........................................................................................................... ................111 Table 4-6: Emission Reductions off Total Fire Extingui shing Base line ....................................................111 Table 4-7: United States Emission Reductions in 2020 and Break-Even Costs for Fire Extinguishing ...112
Table 4-8: Non-U.S. Annex I Emission Reductions in 2020 and Break-Even Costs for Fire Extinguish ing.................................................................................................................. ....................112
Table 4-9: Non Annex I Emission Reductions in 2020 and Break-Even Costs for Fire Extinguishing .....112
Table 5-1: General Overview of So lvent Technologies Used Globally.....................................................117
Table 5-2: Baseline HFC a nd PFC Emission Estimates fr om Solvents (MMTCE)...................................119 Table 5-3: Retrofit Techniques for Batch Vapor Cleaning Machine (Less t han 13 Square Feet) ............122 Table 5-4: Technical Applicability and Incremental Maximum Market Penetration of Solvent Options (Percent) ...................................................................................................................... ......................125 Table 5-5: Emission Reductions off t he Total Solvent Base line (Percent) ...............................................126 Table 5-6: United States Emi ssion Reductions in 2020 and Brea k-Even Costs fo r Solvents ..................126 Table 5-7: Non-U.S. Annex I Em ission Reductions in 2020 and Brea k-Even Costs fo r Solvents............126
Table 5-8: Non Annex I Emissi on Reductions in 2020 and Brea k-Even Costs fo r Solvents ....................126Analysis of Costs to Abate Intern ational ODS Substitute Emissions

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# Executive Summary

Background

Since the introduction of the Montreal Protocol on Substances That Deplete the Ozone Layer, over a decade ago, international use of ozone-depleting subs tances (ODSs) has declined significantly. The key component of the Montreal Protocol is the stipul ation that the production and consumption of all identified compounds that deplete the ozone layer ar e to be phased out by 2030 in developed countries and 2040 in developing countries. The use of hydrofl uorocarbons (HFCs), and to a much lesser extent perfluorocarbons (PFCs), has allowed the rapi d phaseout of chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), and halons in the U.S. and other countries in applications for which other alternatives are not readily available. HFCs have generally been selected for applications where they provide superior technical (reliability) or safety (low toxicity and flammability) performance. In many cases, HFCs provide equal or better energy effici ency as compared to other available alternatives, thereby reducing long-term environmental impacts. HF Cs are expected to replace a significant portion of past and current demand for ODSs in insulating fo ams, refrigeration and air-conditioning, propellants used in metered dose inhalers, specialized fire protection equipment, and in other applications.

The end-use sectors in which transition away from ODS use and production is occurring include the refrigeration and air-conditioning, aerosols, foams, so lvents, and fire-extinguishing industries. An increasing reliance on HFC use in these processes has in turn increased concern over emissions of these gases. Emissions that result from the ODS-substitute sectors contribute to a group of gases known as the high global warming potential (GWP) gases, which in cludes HFCs, PFCs, and sulfur hexafluoride (SF 6 ). These gases are many times more effective (on a per ton basis) than CO 2 in trapping heat in the atmosphere. The global warming potentials of the high GWP gases range from 140 to over 23,900 times the global warming capability of CO 2, and in some cases these gases re main in the atmosphere for hundreds or thousands of years. Currently, the most widely used high GWP gas is HFC-134a, which has a shorter lifetime of about 15 years and a GWP of 1300.



## Overview

The major focus of most previous analyses rega rding GHG emission reduction opportunities has been on energy-related CO 2 emissions. Along with continued effort s on methane and nitrous oxide reductions, reduced emissions of the high GWP gases have the pot ential to make a significant contribution to costeffective GHG reductions. This report has been develope d, in part, to better characterize the role of the high GWP gases as part of a comprehensive GHG mitigati on approach internationally. To that end, this report assembles the costs of reducing quantities of high GWP gas emissions from each of the major
ODS-substitute end-use sectors into an international ma rginal abatement cost (MAC) curve that shows the total emission reductions achievable—at increasing monetary values of carbon—in the year 2020.

The three main objectives of this report—and of the analysis that supports the generation of the MAC curve—are to: (1) present the U.S. EPA’s current forecasts of global high GWP gas emissions from ODSsubstitute sectors through 2020 under a “business-as-usual” scenario that assumes no further actions, apart from normal and expected incremental technological im provements, are taken to reduce emissions; (2)
use available cost and technical data to describe those technologies and practices that can reduce these emissions from the major emissions sources analyzed (some of which are expected to be voluntarily adopted by industry); and (3) estimate the costs of reducing high GWP gas emissions for each majorAnalysis of Costs to Abate Intern ational ODS Substitute Emissions

-ES-2- source included in this analysis. Forecasts of wo rld emissions are estimated and summarized by region for 2005, 2010, 2015, and 2020. Th ese emissions baselines, when combin ed with cost, efficiency, and technical data on the specific technologies and practices available to reduce high GWP gas emissions, provide the set of data used to calculate regional, sectoral, and total global MAC curves. Aggregate results of the analysis—conducted by country—are presen ted (for the purposes of this report) by region in each of the following chapters. The three regions presented include: (1) the United States, (2) non-U.S. Annex I countries (that is, all Annex I countries excep t for the U.S.), and (3) non-Annex I countries (that is, all countries in the world except for Annex I countries). 1

This report is divided into the following five chap ters, each corresponding with one of the ODS-substitute source-categories.

• Chapter 1. HFC Emissions from Refrigeration and Air-Conditioning

• Chapter 2. HFC Emissions from Aerosols

• Chapter 3. HFC Emissions from Foams

• Chapter 4. HFC and PFC Emissions from Fire Extinguishing

• Chapter 5. HFC and PFC/PFPE Emissions from Solvents

For each emission source, this report presents the following information:

• Baseline Emissions of High GWP Gases. A section in each chapter discusses the forecasted emissions from that source through 2020 in the three key regional groups (the U.S., Non-U.S.Annex I and Non-Annex I countries). Emissions baselines are estimated based on a “business-asusual” scenario that assumes no further actions, apart from normal and expected incremental technological improvements, are taken to reduce emissions.

• High GWP Gas Emission Reduction Options and Associated Costs. Several available technologies or practices (“options”) have the potential to reduce high GWP gas emissions within
each sector. The U.S. EPA uses discounted cash fl ow analysis to estimate the present and future cost of achieving the reductions associated with each option discussed. Costs are presented in terms of year 2000 United States dollars per metric ton of carbon equivalent ($/TCE). The costs

associated with emissions reductions have been identified and categorized as one-time investments and/or annual operating and maintenan ce (O&M) costs. In most cases, data on these costs were available; where sufficient data were not available, EPA has presented the options qualitatively.

The framework for this analysis is global in scope, cons istent with the intent to develop inputs useful for
macroeconomic studies. Given this broad view, this report does not present highly detailed analyses of the individual sources of high GWP gas emissions, nor can it comprehensively evaluate the comparative advantages or technical challenges of alternative technologies in specific industry sectors. It does, however, provide a valuable resource for policy makers internationally in characterizing the role of the high GWP gases as part of a comprehensive green house gas (GHG) mitigation approach. While these gases represent only a small portion of global GHG emissions, they include the most quickly growing
sources of emissions. While the focus of most previous work on GHG emission reduction opportunities has been on energy-related CO 2 emissions, reduced high GWP gases can also contribute to cost-effective GHG reductions. This analysis estimates the costs of innovative reduction efforts that can be undertaken by various industries, and is meant to supplemen t carbon dioxide, nitrous oxide, and methane economic

1 The term “Annex I” refers to members of the United Nations Framework Convention on Climate Change (UNFCCC) listed under Annex I, which includes developed co untries and countries with economies in transition. A comprehensive list of countries and the regions under which they are categorized for the purposes of this report is provided in Appendix B.Analysis of Costs to Abate Intern ational ODS Substitute Emissions

-ES-3- analyses in order to provide a broader understanding of the costs of a comprehensive GHG mitigation strategy that covers all of these gases; it will also help to identify opportu nities to reduce the costs associated with such a strategy.



## Baseline Emission Estimates

Until recently, few countries have made significant effort s to track and project the use and emissions of HFCs and PFCs used as ODS substitutes. However, to the extent that country-specific ODS substitute emission information is available—e.g. from Na tional Communications submitted under the United Nations Framework Convention on Climate Change (UNFCCC)—each country’s data was used as the basis for projecting future emissions.

In the absence of reported data, the following approa ch was used. First, a “Vintaging Model” of ODScontaining equipment and products was used to estimate the U.S. use a nd emissions of ODS substitutes. Next, emissions from non-U.S. countries were estim ated for each ODS consuming end-use in each country. In developing these estimates, it was initia lly assumed that the international transitions from
ODSs to HFCs and other substitutes follow the same substitution patterns as the United States. These
U.S.-based substitution scenarios were then customized to each region or country using adjustment
factors that take into consideration differen ces in historical and projected economic growth, 2 the timing of the phase-out, and the distribution of ODS and substitute use across end-uses in each region or country. In some sectors, specific adjustment s or methodologies were used that were specific only to that sector. The methodology used to estimate and adjust em issions is described further in Appendix A.

Exhibit ES-1 shows the emission estimates of high GWP gases from the ODS and ODS-substitute end use sources in the years 2005, 2010, 2015, and 2020. The exhibit shows a continuing rise in emissions from each of these sectors throughout th e forecasted period. This growth in HFC and PFC emissions is expected as substitution in ODS market s reaches maximum market penetration. 3

Exhibit ES-1: Baseline World ODS Substitute High GWP Gas Emissions (MMTCE) Source of High GWP Gases Used as ODS Substitutes 2005 2010 2015 2020 Refrigeration and Air-Conditioning 59.92 94.50 128.73 158.80 Partially and Fully Fluorinated Solvents 1.07 1.14 1.20 1.26
Aerosols 12.26 14.44 15.92 17.60
Foams 2.94 5.30 7.76 16.38 Fire Extinguishing 2.26 2.26 2.65 3.19
TOTAL 78.45 117.66 156.26 197.23

Notes:
Forecast assumes a “business-as-u sual” scenario as described above. The emissions forecast includes only direct emissions. Indirect emissions—those t hat result from the production of energy required in the manufacturi ng and operation of the emitti ng sources—are not included. Sums might not add to total due to independent rounding.

Each chapter of this report presents similar tables, each of which present data specific to one of the three key regional groups analyzed: the United States, Non-U. S. Annex I countries, and Non-Annex I countries.

2 Economic growth is used as a proxy for the growth in the use of and emissions from products containing ODSs and
ODS substitutes. Further research is wa rranted to assess how closely these two variables have been related in the past and may be related in the future.

3 Although many developed countries are well into the phaseout of ODS production, continued substitution with high GWP gases, especially in developing countries, is expected much further than 2020, as long-lived ODScontaining products, such as air-conditioners and foams, are retir ed and replaced with ODS substitutes.Analysis of Costs to Abate Intern ational ODS Substitute Emissions

-ES-4- At the present time, industry decisions to pursu e emission reductions depend greatly on the costeffectiveness of the available reduction options. A ma jor purpose of this report is therefore to estimate the cost-effectiveness of various emission reduction opt ions and to determine the quantity of future emission reductions that might be achievable acro ss a range of possible market values of carbonequivalent emission reductions.



## Economic Analysis of Options fo r Reducing Emissions of High GWP
Gases

In addition to baseline emission estimates, each source-specific chapter of this report analyzes the technical and economic viability of several emission m itigation options. The cost of implementation and the resulting emission reductions associated with each option provide the bases for the analysis. The reduction options considered in this report were identified from various reports and literature on emission reductions, industry publications, a nd industry contacts. The most promising options to reduce high GWP gas emissions from ODS substitute sources broadly in clude: substituting other gases for high GWP gases in a variety of applications, where safety and performance requirements can be met; implementing new technologies that use and/or emit significantly lower amounts of the high GWP gas; and various process and handling options that reduce emissions during the manufacture, use, and disposal of products containing high GWP gases.

Data regarding options that are assumed to have al ready reached full market penetration or that are assumed not to be feasible in particular countries or regions are not included in the MAC analysis for those countries. Where particular options are deem ed applicable, several specific assumptions and data
elements contribute to the calculation of the MAC.



### Discounting Costs and Benefits

This report uses discounted cash flow analysis to estimate the cost of achieving reductions through instituting each potential mitigation option available to th e several sources. All costs are presented in real year 2000 United States dollars. Consistent with th e approach EPA has used in developing high GWP gas and methane MAC curves for the United States, th e practice of using discounted cash flow analysis reflects the decision-making process that manufacturers use when considering investments in emission reduction practices (see EPA, 1999; EPA, 2001). This decision-making process is typically a cost-benefit analysis, comparing the positive cost (financial burde n) to the negative cost (financial and/or emission reduction benefit) associated with each potential m itigation option. Data to support estimates of both costs and benefits of options are available in most cases; where sufficient data are not available, the options are summarized qualitatively, but are not included in the MAC curves presented.

The positive costs are typically categorized as either one-time (capital) investment costs—such as may be incurred when installing new equipment or applyi ng a retrofit option—or as O&M costs—such as are generally applied annually to mainta in an option through manual labor, rou tine repairs, electricity or other fuel use, etc. Mitigation options may have one or bot h of these types of costs, and both ultimately affect the viability of the option. The costs used in this international analysis improve upon those used in the analysis that supported U.S. High GWP Gas Emissions 1990-2010: Inventories, Projections, and Opportunities for Reductions (EPA, 2001). International costs are extrapolated from these values using adjustment factors that vary by country and region a ccording to the most pertinent variable (specific to each option or technology). Factors used to adjust these costs include relative labor rates (for laborintensive options) and relative electricity prices (fo r energy-intensive options). For some specificAnalysis of Costs to Abate Intern ational ODS Substitute Emissions

-ES-5- options—specifically those that are considered in the context of an international market in which prices are not highly variable by country—costs are assumed to be the same internationally.

Negative costs, or benefits, include savings that ar e achieved by reducing or mitigating emissions of a product, sale or recycling of rec overed product, or by improving process energy efficiency. The value associated with a particular product may vary by count ry, and where possible, this variability is taken into account in estimating the benefit.

Together, all of the cost data described here, e xpressed as costs or savings per metric ton of carbon equivalent emissions reduced, contribute to the calculation of a break-even price specific to each mitigation option. This figure represents the point at which an entity (individual, corporation, industry, etc.)—regardless of environmental, legal, or policy c oncerns—will be financially indifferent in deciding whether to institute an emissions mitigation optio n. The concept of the break-even price and its implications are discussed briefly in the Marginal Abatement Cost Curves section below, and—along with the general equation used to estimate its value—in greater detail in Appendix D.



### Marginal Abatement Cost Curves

The world high GWP gas MAC curve is shown in Exhi bits ES-2 and ES-3 at four and twenty percent discount rates, respectively. Exhibit ES-3 also inco rporates a forty percent tax rate. Each of these two curves uses the appropriate schedule of emission reduc tions and costs for all of the high GWP gases as presented in Exhibits ES-4 and ES-5. The MAC cu rve illustrates emission reductions achievable as the value of carbon increases ($/TCE).

The MAC curve is derived by rank ordering individu al reduction opportunities by $/TCE and plotting the corresponding emission reductions cumulatively. E ach point along the MAC curve shows the cost of abating an additional ton of carbon-equivalent gas at the margin. The break-even price (expressed in dollars per metric ton of carbon equi valent emissions and calculated as described in Appendix D) of each option determines its placement with respect to the y-axis. Moving away from the origin, each point on the curve represents a cumulative sum of emission re ductions with respect to the x-axis. Points corresponding to a zero or negative $/TCE value along the y-axis demonstrate a market in which the benefits of reducing the high GWP gas—represented by avoided costs of HFCs, for example—pay for the emission reduction effort alone. As discussed above, th ese negative costs imply that it is cost-efficient to adopt the measure (i.e., the option will result in fi nancial savings). Positive break-even values imply financial costs that only the introduction of some extern al value of emission reductions (determined by an emissions trading market, through taxes or incentives, or through some other externally imposed value) can outweigh, thereby making an investment viable.

As seen in Exhibit ES-2—which is in effect an economic supply curve measuring the quantity of emission reductions supplied by industry to the market at increasing values of carbon—as one follows the curve away from the origin, its elas ticity decreases drastically at or around a certain point. At values above this point (roughly $200/TCE), the curve is re latively inelastic; thus, subsequent or marginal
increases in the value of carbon will ha ve a decreased effect on emission re ductions. Reductions past this point are unlikely to occur without some external benef it or incentive, neither of which is within the scope of this publication. It is, however, interesting to note the quantifiable emission reductions that are costeffective barring any type of external variable; th ese options for which break-even prices fall below zero contribute to a total potential emission reduction of about 18 MMTCE. A total of 65 MMTCE reduction in emissions is achievable at a carbon value less than about $200/TCE.Analysis of Costs to Abate Intern ational ODS Substitute Emissions

-ES-6- Exhibit ES-2: 2020 Marginal Abatement Cost Curve for All OD S Substitutes at Four Percent Discount Rate (No Tax Rate)

($200) $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

0 10 20 30 40 50 60 70
Sum of Emissions Avoided (MMTCE)Value of Carbon Equivalent (2000$/TCE) 0% 5% 10% 15% 20% 25% 30% 35%

Exhibit ES-3: 2020 Marginal Abatement Cost Curve for All ODS Substitutes at Tw enty Percent Discount Rate (40% Tax Rate)

($200) $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

0 10 20 30 40 50 60 70
Sum of Emissions Avoided (MMTCE)Value of Carbon Equivalent (2000$/TCE) 0% 5% 10% 15% 20% 25% 30% 35%Analysis of Costs to Abate International ODS Substitute Emissions-ES-7-Exhibit ES-4: World Emission Reductions in 2020 and Break-EvenCosts for ODS Substitutes (4% Discount Rate / 0% Tax Rate)SECTOR Option NameBreak-Even Price($/TCE)aEmissionReduction ofOption (MMTCE)Reductionoff Baselineof Option(Percent)CumulativeReductions(MMTCE)Cumulative% Reductionfrom 2020BaselineLow HighSolvents Retrofit $ (134.18) $ (134.18) 0.013 0.0% 0.013 0.0%Aerosols (Non-MDI) HFC to HC $ (22.76) $ (22.76) 1.078 0.5% 1.091 0.6%Aerosols (Non-MDI) HFC to NIK $ (21.37) $ (21.37) 1.078 0.5% 2.169 1.1%Foams Spray HFC-245fa/CO2 (HFC-227ea/365mfc) to HC $ (17.97) $ (15.13) 0.457 0.2% 2.626 1.3%Refrigeration/AC Leak Repair $ (11.74) $ (11.74) 3.593 1.8% 6.219 3.2%Foams PU One Component HFC-152a to HC $ (9.40) $ (9.40) - 0.0% 6.219 3.2%Foams XPS: HFC-134a/CO2 to CO2/Alcohol $ (8.50) $ (8.50) - 0.0% 6.219 3.2%Refrigeration/AC Replace DX with Distributed System $(57.61) $ (4.78) 11.108 5.6% 17.327 8.8%Foams PU One Component HFC-134a to HC $ (0.07) $ (0.07) 0.136 0.1% 17.463 8.9%Solvents HFC to HFE $ - $ - 0.426 0.2% 17.889 9.1%Refrigeration/AC Recovery $ 0.49 $ 0.49 8.510 4.3% 26.399 13.4%Solvents NIK Semi-Aqueous $ 0.80 $ 0.80 0.098 0.0% 26.497 13.4%Aerosols (Non-MDI) HFC-134a to 152a $ 1.91 $ 1.91 3.991 2.0% 30.487 15.5%Solvents NIK Aqueous $ 6.67 $ 6.67 0.196 0.1% 30.683 15.6%Refrigeration/AC Enhanced HFC-134a in MVACs $ (275.47) $ 7.02 5.029 2.5% 35.712 18.1%Foams XPS: HFC-134a/CO2 to CO2 $ 11.48 $ 11.48 1.700 0.9% 37.412 19.0%Foams Appliance HFC-134a to HC $ 17.35 $ 17.35 0.039 0.0% 37.451 19.0%Foams Appliance End-of-Life: Automated Process $ 23.82 $ 23.82 1.336 0.7% 38.787 19.7%Refrigeration/AC HFC-152a in MVACs $ (73.65) $ 30.81 4.921 2.5% 43.708 22.2%Foams PU Continuous & Discontinuous PanelHFC to HC $ 43.83 $ 43.83 - 0.0% 43.708 22.2%Fire Extinguishing FK-5-1-12 $ 83.66 $ 85.22 0.495 0.3% 44.203 22.4%Foams Spray HFC-245fa/CO2 (HFC-227ea/365mfc) to CO2 $ 96.45 $ 96.45 0.343 0.2% 44.546 22.6%Refrigeration/AC Ammonia Secondary Loop $ 11.47 $ 123.84 5.918 3.0% 50.463 25.6%Refrigeration/AC HFC Secondary Loop $ 9.66 $ 125.39 8.993 4.6% 59.456 30.1%Fire Extinguishing Inert Gases $ 71.10 $ 136.29 0.396 0.2% 59.852 30.3%Foams Appliance End-of Life: Manual Process $ 175.09 $ 175.09 0.793 0.4% 60.645 30.7%Refrigeration/AC CO2 for New MVACs $ (23.44) $ 180.72 4.237 2.1% 64.882 32.9%Foams Appliance HFC-245fa (HFC-227ea/365mfc) to HC $ 201.80 $ 201.80 0.225 0.1% 65.107 33.0%Fire Extinguishing Water Mist $ 111.76 $ 287.80 0.057 0.0% 65.163 33.0%Aerosols (MDI) Dry Powder Inhalers $ 1,691.25 $ 1,691.25 3.409 1.7% 68.572 34.8%aCosts vary by country/region based on one-time or annual adjustmentfactors (e.g., electricity price,fuel price, etc.); therefore, the lowest and highest costs are shown.Analysis of Costs to Abate International ODS Substitute Emissions-ES-8-Exhibit ES-5: World Emission Reductions in 2020 and Break-Even Costs for ODS Substitutes (20% Discount Rate / 40% Tax Rate)SECTOR Option NameBreak-Even Price($/TCE)aEmissionReduction ofOption(MMTCE)Reductionoff Baselineof Option(Percent)CumulativeReductions(MMTCE)Cumulative% Reductionfrom 2020BaselineLow HighSolvents Retrofit $ (132.14) $ (132.14) 0.013 0.0% 0.013 0.0%Aerosols (Non-MDI) HFC to HC $ (21.95) $ (21.95) 1.078 0.5% 1.091 0.6%Aerosols (Non-MDI) HFC to NIK $ (20.75) $ (20.75) 1.078 0.5% 2.169 1.1%Refrigeration/AC Leak Repair $ (3.78) $ (3.78) 3.593 1.8% 5.761 2.9%Solvents HFC to HFE $ - $ - 0.426 0.2% 6.187 3.1%Refrigeration/AC Recovery $ 0.49 $ 0.49 8.510 4.3% 14.697 7.5%Foams Spray HFC-245fa/CO2 (HFC-227ea/365mfc) to HC $ (13.98) $ 1.53 0.457 0.2% 15.155 7.7%Solvents NIK Semi-Aqueous $ 2.14 $ 2.14 0.098 0.0% 15.253 7.7%Aerosols (Non-MDI) HFC-134a to 152a $ 2.49 $ 2.49 3.991 2.0% 19.243 9.8%Foams PU One Component HFC-152a to HC $ 2.77 $ 2.77 - 0.0% 19.243 9.8%Foams XPS: HFC-134a/CO2 to CO2/Alcohol $ 12.82 $ 12.82 - 0.0% 19.243 9.8%Foams PU One Component HFC-134a to HC $ 14.08 $ 14.08 0.136 0.1% 19.379 9.8%Solvents NIK Aqueous $ 17.89 $ 17.89 0.196 0.1% 19.575 9.9%Foams Appliance End-of-Life: Automated Process $ 37.16 $ 37.16 1.336 0.7% 20.912 10.6%Foams PU Continuous and Discontinuous Panel HFC to HC $ 56.26 $ 56.26 - 0.0% 20.912 10.6%Refrigeration/AC Replace DX with Distributed System $15.99 $ 72.96 11.108 5.6% 32.020 16.2%Foams XPS: HFC-134a/CO2 to CO2 $ 122.09 $ 122.09 1.700 0.9% 33.719 17.1%Foams Spray HFC-245fa/CO2 (HFC-227ea/365mfc) to CO2 $ 122.55 $ 122.55 0.343 0.2% 34.062 17.3%Refrigeration/AC HFC Secondary Loop $ 45.33 $ 173.22 8.993 4.6% 43.055 21.8%Refrigeration/AC Ammonia Secondary Loop $ 55.34 $ 180.96 5.918 3.0% 48.972 24.8%Foams Appliance End-of-Life: Manual Process $ 191.65 $ 191.65 0.793 0.4% 49.765 25.2%Refrigeration/AC HFC-152a in MVACs $ 55.55 $ 205.42 4.921 2.5% 54.686 27.7%Fire Extinguishing FK-5-1-12 $ 334.91 $ 336.75 0.495 0.3% 55.181 28.0%Foams Appliance HFC-134a to HC $ 404.45 $ 404.45 0.039 0.0% 55.219 28.0%Refrigeration/AC Enhanced HFC-134a in MVACs $ (35.34) $ 468.38 5.029 2.5% 60.248 30.5%Fire Extinguishing Inert Gases $ 369.25 $ 505.32 0.396 0.2% 60.645 30.7%Fire Extinguishing Water Mist $ 467.17 $ 781.28 0.057 0.0% 60.701 30.8%Refrigeration/AC CO2 for New MVACs $ 422.48 $ 839.80 4.237 2.1% 64.938 32.9%Foams Appliance HFC-245fa (HFC-227ea/365mfc) to HC $ 1,115.58 $ 1,115.58 0.225 0.1% 65.163 33.0%Aerosols (MDI) Dry Powder Inhalers $ 1,691.25 $ 1,691.25 3.409 1.7% 68.572 34.8%aCosts vary by country/region based on one-time or annual adjustmentfactors (e.g., electricity price,fuel price, etc.); therefore, the lowest and highest costs are shown.Analysis of Costs to Abate Intern ational ODS Substitute Emissions

-ES-9- 

## References

EPA (Environmental Protection Agency). 2001. U.S. High GWP Gas Emissions 1990-2010: Inventories, Projections, and Opportu nities for Reductions. U.S.EPA #000-F-97-000. Office of Air and Radiation, U.S. Environmental Protection Agency. Washington, DC, June 2001.

EPA (Environmental Protection Agency). 1999. U.S. Methane Emissions 1990-2020: Inventories, Projections, and Opportunities for Reductions . U.S. EPA #430-R-99-013. Office of Air and Radiation, U.S. Environmental Protection Agency, Washington, DC, September 1999.Analysis of Costs to Abate International ODS Substitute Emissions

-1- 

## 1 Analysis of Costs to Abate International HFC Emissions from Refrigeration and Air-Conditioning

1.1 Introduction

A number of hydrofluorocarbons (HFCs) are used in refrigeration and air-conditioning systems and are emitted to the atmosphere during equipment operation and repair. Specifically, emissions occur during product and equipment manufacturing, during equipmen t servicing, and from the disposal of equipment and used refrigerant containers. Emissions also occur during equipment operation, as a result of component failure, leaks, and purges. The use of refrigeration and air-cond itioning equipment also generates “indirect” emissions of greenhouse gases (primarily carbon dioxide) from the generation of power required to operate the equipment. In ma ny, but not all, refrigera tion and air-conditioning applications, these indirect emissions outweigh the direct emissions and, hence, energy efficiency has a major impact on the total greenhouse gas emissions of an application. To the extent possible, both direct
and indirect emissions are considered in the re frigeration/air-conditioning analysis; however, options aimed solely at improving energy efficiency rather than abating HFC emissions are not explored in detail. HFCs used in this sector have global warming pot entials (GWPs) that range from 140 to 11,700; the majority of HFCs used today in the refrigeration and air-conditioning sector have GWPs from 1,300 (i.e., HFC-134a) to 3,300 (i.e., R-507A).

The refrigeration and air-conditioning sector includes eight major end-uses:

• Household refrigeration;

• Motor vehicle air-conditioning;

• Chillers;

• Retail food refrigeration;

• Cold storage warehouses;

• Refrigerated transport;

• Industrial process refrigeration; and

• Residential and small commercial air-conditioning/heat pumps.

Each end-use is composed of a variety of different equipment types that have historically used ozonedepleting substances (ODSs) such as chlorofluorocarbons (CFCs) or hydrochlorofluorocarbons (HCFCs). As the ODS phase-out is taking effect under the Mont real Protocol, equipment is being retrofitted or replaced to use HFC-based substitutes or intermediate substitutes—HCFCs—that will eventually need to be replaced by non-ozone depleting alternatives. In time, HCFCs are expected to be replaced with HFCs or other alternative refrigerants. These e nd-uses are explained in more detail below.

Household Refrigeration

The household refrigeration end-use c onsists of household refrigerators and freezers. HFC-134a is the primary substitute for CFC-12 in domestic refriger ation units in most developing countries, with hydrocarbon refrigerant, especially isobutane (HC-600a ), dominating much of the European market and continuing to grow in market share. HC-600a is al so gaining market share in Japan (Kuijpers, 2002).Analysis of Costs to Abate International ODS Substitute Emissions

-2- The charge size of a typical household refrigeration unit has decreased over the past 15 years to about 0.17 kilograms for new HFC-134a units (with HC-600a systems being about 40 percent smaller), and the equipment has an expected lifetime of about 20 years. This end-use is one of the largest in terms of the number of units in use; however, because the charge sizes are small and the units are hermetically sealed (and, therefore, rarely require recharging), emissions are relatively low. Thus, the potential for reducing emissions through leak repair is small. In most Annex I countries, where regulations are in place that require the recovery of refrigerant from appliances prio r to disposal, the retirement of old refrigerators is not expected to result in significant refrigerant em issions. Refrigerant emissions at disposal from developing countries, where refrigerant recovery is not generally required, are expected to be greater. Emissions from the insulating foam in household refrige rators/freezers are discussed in a separate chapter of this report.

Motor Vehicle Air-Conditioning

Motor vehicle air-conditioners (MVACs) refer to the air-conditioning systems contained in motor vehicles (e.g., cars, trucks, and buses). Currently, the qua ntity of refrigerant contained in a typical car airconditioner is approximately 1 kilo gram (typically from 1 to 1.2 kilograms for vehicles containing CFC12 systems, and an average of 0.8 kilograms for vehicles containing HFC-134a systems) (Atkinson, 2000). Due to concerns over the environmental impact of refrigerants, the average charge size of MVACs
–as well as associated leak rates—have been reduced over time, and this trend is expected to continue. The expected lifetime of MVACs is about 12 years. Refrigerant use in this sector is significant because there are more than 700 million motor vehicles regi stered globally (Ward’s, 2001). In developed countries, CFC-12 was the refrigerant used in MVACs until it was phased out of new cars from 1992 to 1994, after which all air-conditioners installed in ne w automobiles used HFC-134a. HFC-134a is also
used as a retrofit chemical for existing CFC-12 systems (UNEP, 1998). CFC-12 is still used in MVACs in developing countries and its availability in so me developed countries (e.g., the United States) has resulted in its use for servicing older MVACs that we re originally manufactured as CFC-12 systems. A variety of HCFC/hydrocarbon refrigerant blends are approved for use in the United States by the U.S. EPA as replacements for CFC-12 in MVACs, although th ese blends have not been endorsed by vehicle or system manufacturers for such use. Globally, HCFC /hydrocarbon blends have captured only a small and declining share of the retrofit market. Climate ch ange concerns associated with the use of HFC-134a resulted in the research and development into othe r MVAC alternatives. Possible alternatives to HFC134a systems include transcritical carbon dioxide sy stems, hydrocarbons, and HFC-152a systems, all of which are under study and development (SAE, 2000).

Chillers

Chillers are used to regulate the temperature and re duce humidity in offices, hotels, shopping centers, and other large buildings, as well as in specialty applicati ons on ships, submarines, and nuclear power plants and other industrial applications. The four primary t ypes of chillers are centrifugal, reciprocating, scroll, and screw—each of which is named for the type of compressor employed. Chillers are long-lasting relative to most air-conditioning and refrigeration e quipment. Most operating chillers will remain in service for more than 20 years, and some will last 30 years or more. A wide variety of chillers are offered, with cooling capacities from 7 kW to over 30,000 kW (RTOC, 2003). The charge size of a chiller depends mostly on cooling capacity, and rang es from less than 25 kilograms (reciprocating) to over 2,000 kilograms (centrifugal). HCFC-123 has been the refrigerant of choice as a retrofit option for newer existing CFC-11 units and HFC-134a has been th e refrigerant of choice as a retrofit option for newer existing CFC-12 units. The replacement mark et for CFC-12 high-pressure chillers and CFC-11 low-pressure chillers is dominated by both HCFC-1 23 chillers and HFC-134a chillers in developed and developing countries. Following the phase-out of the production of HCFCs (in 2030 for developedAnalysis of Costs to Abate International ODS Substitute Emissions

-3- countries and 2040 for developing countries), 1 recycled, recovered, and reclaimed HCFCs will continue to be used in most countries. This trend is not the case, however, in the EU, where restrictions on the use of HCFCs in new equipment exist, where the production of HCFCs is not permitted beyond 2010, and where recycled HCFCs may not be reused beyond 2015. In the EU, HFC-134a will be an important option for chillers, but because of its global warming impact, it is being targeted for phase-out there. Ammonia chillers are, therefore, being used as an HFC a lternative in some EU countries (Kuijpers, 2002).

Additionally, HFC-245fa is a potential refrigerant for use in new design low-pressu re chillers to replace the market currently dominated by HCFC-123 (in lo w-pressure chillers), and HFC-134a (in high-pressure chillers). However, due to a variety of reasons, th e commercialization of this chiller technology is not likely to occur in the next ten years or so, if at a ll. High-pressure chillers that currently use HCFC-22 will ultimately be replaced by several HFC refrigerant bl ends and HFC-134a chillers. Likewise, most existing CFC-114 chillers will be replaced with HFC-236fa or HFC-134a chillers, for use primarily in specialty applications (e.g., on ships, submar ines, and nuclear power plants).

Retail Food Refrigeration

Retail food refrigeration includes refrigerated equipm ent found in supermarkets, convenience stores, restaurants, and other food service establishments. This equipment includes sma ll reach-in refrigerators and freezers, refrigerated display cases, walk-in coolers and freezers, and large parallel systems. Charge sizes range from 6 to 1,800 kilograms, with a lif etime of 15 to 20 years. Convenience stores and restaurants typically use stand-alone refrigerators, freezers, and walk-in coolers. In contrast, supermarkets usually employ large parallel system s that connect many display cases to a central condensing unit by means of extensiv e piping. Because the piping required for connection of all the cases can be miles long, these systems contain very large refrigerant charges and often experience high leak

rates.

During the earlier phases of the CFC phase-out in develope d countries, the use of HCFC-22 in retail food refrigeration was expanded considerab ly. Retail food equipment is being retrofitted with HCFC-based blends, although HFC blends are also used as a re trofit refrigerant. The HFC blend R-404A is the preferred refrigerant being used in new retail food equipment in developed countries, while R-507A is also used extensively in the market (Kuijpers, 2002). In developing countries, distributed systems as well as centralized systems that use HFCs, hydrocarbons, ammonia, and carbon dioxide are being developed (both with and without seconda ry loops) (Kuijpers, 2002).

Cold Storage Warehouses

Cold storage warehouses are used to store meat, produ ce, dairy products, and ot her perishable goods. The expected lifetime of a cold storage warehouse is 20 to 25 years, and while charge sizes vary widely with system size and design, a rough average is about 4,000 kilograms. Warehouses in developed countries have historically used CFC-12 and R-502 refrigera nts, and use HCFC-22 and HFC-134a as replacements in new equipment. Once HCFCs are phased out, R- 404A and R-507A are expected to replace HCFC-22 in new warehouses. Retrofits are also possible; fo r example, existing CFC-12 cold storage warehouses can be retrofitted with R-401A, and existing R-502 wa rehouses can be retrofitted with R-402A. Not all

1 Several scientific studies have found that HCFC-123 in chillers can bring environmental benefits compared to other refrigerants as a result of its low ODP, very low direct GWP, very short atmospheric lifetime, and the fact that its design allows for both extremely low emissions (documented at less than 0.5 percent annually [Calm et al., 1999; Smithart, 2003]) and the highest full- load efficiency (RTOC, 2003). None theless, the emission projections developed for this analysis assume full compliance with the current HCFC phase-out schedule.Analysis of Costs to Abate International ODS Substitute Emissions

-4- cold storage warehouses currently use halocarbon refrigerants. Many facilities, for example, use ammonia in secondary loop brine systems.

Refrigerated Transport

The refrigerated transport end-use includes refrigerated sh ip holds, truck trailers, railway freight cars, and other shipping containers. The average charge sizes ar e relatively small (7 to 8 kilograms). The expected lifetime of a refrigerated transport system is 12 years. Trailers, railway cars, and shipping containers using CFC substitute refrigerants are commonly char ged with HFC-134a, R-404A , and HCFC-22 (UNEP, 1999a). Ship holds, on the other ha nd, rely on HCFC-22 (UNEP, 1999a) and ammonia. In addition to HFC-134a, R-404A can also be used in new equipmen t. Existing equipment can be retrofitted with R-401A R-402A, R-404A, R-507A, and othe r refrigerants. In addition, refrigerated transport equipment includes systems that operate based on the evapor ation and expansion of liquid carbon dioxide or nitrogen.

Industrial Process Refrigeration

Industrial process refrigeration includes complex, of ten custom-designed, refrigeration systems used within the chemical industry, petrochemical industr y, pharmaceutical industry, oil and gas industry, metallurgical industry, sports and leisure facilities, and many other applications. Charge sizes typically range from 650 to 9,100 kilograms (although charge si zes for some applications can fall outside this range), and the average lifetime is approximately 25 years. Ammonia, hydrocarbons, HCFC-123, and HFC-134a are expected to be the most widely used substitute refrigerants for new equipment in the near future (UNEP, 1999a). Assuming no changes to the requirements of the Montreal Protocol and no additional restrictions on refrigerant choice, upon co mpletion of the HCFC phase-out, HFC-134a, R-404A and R-507A are expected to be the primary refrigerants used in this end-use.

Residential and Small Commercial Air-Conditioning/Heat Pumps

Residential and small commercial air-conditioning (window units, unitary air-conditioners, packaged terminal air-conditioners) and heat pumps are another source of HFC emissions. Most of these units are window and through-the-wall units, ducted central air-conditioners, and non-ducted split systems. The charge sizes of the equipment in this sector range based on cooling capacity requirements, and are on the order of 0.5 to 10 kilograms for residential syst ems, and about 10 to 180 kilograms for commercial systems. The average lifetime of equipment is 15 y ears. Residential and commercial air-conditioning has been relying almost exclusively on HCFC-22 refri gerant. R-410A, R-407C, and HFC-134a are currently being used to replace HCFC-22 in some new equipment for most end-uses, and this trend is expected to continue as HCFC-22 is phased out. In particular, R- 410A is expected to dominate the U.S. residential market in the future, while R-407C is expected to replace HCFC-22 mainly in retrofit applications and some new residential equipment. Other countries may experience different patterns of R-410A and R407C use.Analysis of Costs to Abate International ODS Substitute Emissions

-5- 

## 1.2 Baseline Emission Estimates

1.2.1 Emission Esti mating Methodology

Description of Methodology

A full description of the emission model used to cal culate ODS substitute emissions from all sectors is provided in Appendix A. Specific information on how the model calculates refrigeration and airconditioning emissions is described below.

The U.S. EPA’s Vintaging Model and data from industr y are used to simulate the aggregate impacts of the ODS phase-out on the use and emissions of various fluorocarbons and their substitutes in the United States (see Appendix A). Emission estimates for non- U.S. countries incorporate estimates of the consumption of ODSs by country, as provided by th e United Nations Environment Programme (UNEP, 1999b). The estimates for the European Union (EU) we re provided in aggregate and each country’s gross domestic product (GDP) was used as a proxy to divide the consumption of the individual member nations from the EU total. Estimates of country-specifi c ODS consumption as reported under the Montreal Protocol were then used in conjunction with Vint aging Model output for each ODS-consuming sector. In the absence of country level data, preliminary estimat es of emissions were calculated by assuming that the
transition from ODSs to HFCs and other substitut es follow the same general substitution patterns internationally as observed in the United States. Fr om this preliminary assumption, emission estimates were then tailored to individual countries or regions by applying adjustment fa ctors to U.S. substitution scenarios, based on relative differences in (1) economic growth; (2) rates of ODS phase-out; and (3) the
distribution of ODS use across end-uses in each re gion or country, as explained below and in further detail in Appendix A.

Emission Equations

For refrigeration and air-conditioning products, emission calculations are split into two categories: emissions during equipment lifetime, which arise from annual leakage and service losses, and disposal emissions, which occur at the time of discard. The first equation calculates the emissions from leakage and service, and the second equation calculates the emis sions resulting from disposal of the equipment. These service/leakage emissions and disposal emissions are summed to calculate the total emissions from refrigeration and air-conditioning. As new technologi es replace older ones, improvements in their leak, service, and disposal emission rates are assumed to occur.

Emissions from any piece of equipment include both the amount of chemical leaked during equipment operation and the amount emitted during service. Emi ssions from leakage and servicing can be expressed
as follows:



### Es j 

### = (l a 

### + l s 

### ) × 

# Σ Qc j-i+1 for i=1 → k

Where:

Es = Emissions from Equipment Serviced . Emissions in year j from normal leakage and servicing of equipment.

l

a = Annual Leak Rate . Average annual leak rate during no rmal equipment operation (expressed as a percentage of total chemical charge).Analysis of Costs to Abate International ODS Substitute Emissions

-6- l

s = Service Leak Rate . Average annual leakage from equipm ent servicing (expressed as a percentage of total chemical charge). Qc = Quantity of Chemical in New Equipment . Total amount of a specific chemical used to charge new equipment in a given year by weight. j = Year of emissions

. i = Counter . From 1 to lifetime (k).

k = Lifetime . The average lifetime of the equipment.
Note: It is recognized that leakage rate s are not a function of the total system, but change with system pressure and temperature. For instance, when equipment charges are diminished due to refrigeran t losses (leakage), system pressures are also reduced somewhat and the leakage rate changes. This becomes appr eciable once the entire liquid refrigerant is gone. The average leak rates used in the e quation above account for this e ffect. They also account for the range of equipment types (from those that do not leak at all to those with high leaks) and service practices (i.e., proper refrigerant recovery and refrigerant venting).

Emissions also result at equipment disposal. The disposal emission equations assume that a certain percentage of the chemical charge will be emitted to the atmosphere when that vintage is discarded. Disposal emissions are thus a function of the quantity of chemical contained in the retiring equipment fleet and the proportion of chemical released at disposal:



### Ed j 

### = Qc j-k+1 

### × [1 – ( rm × rc )]

Where:

Ed = Emissions from Equipment Disposed . Emissions in year j from the disposal of equipment. Qc = Quantity of Chemical in New Equipment . Total amount of a specific chemical used to charge new equipment in year j-k+1 , by weight.

rm = Chemical Remaining . Amount of chemical remaining in equipment at the time of disposal (expressed as a percentage of total chemical charge).

rc = Chemical Recovery Rate . Amount of chemical that is recovered just prior to disposal (expressed as a percentage of chemical remaining at disposal (rm)). j = Year of emissions

. i = Counter . From 1 to lifetime (k).

k = Lifetime . The average lifetime of the equipment.

Finally, lifetime and disposal emissions are summe d to provide an estimate of total emissions.



### E

j 

### = Es j 

### + Ed j

Where:

E = Total Emissions . Emissions from refrigeration and air-conditioning equipment in year j

. Es = Emissions from Equipment Serviced . Emissions in year j from normal leakage and servicing (recharging) of equipment.

Ed = Emissions from Equipment Disposed . Emissions in year j from the disposal of equipment. j = Year of emissions

.
Regional Variations/Adjustments

From the general methodology described in Appe ndix A, the following regional assumptions were applied:

• Adjustment for EC-Regulation No. 2037/2000. Countries in the European Union are assumed to be in full compliance with EC-Regulati on No. 2037/2000, which stipulates that no newAnalysis of Costs to Abate International ODS Substitute Emissions

-7- refrigeration and air-conditioning equipment be manu factured with HCFCs as of January 1, 2002. The EC regulation also bans the use of HCFC s in all equipment after January 1, 2015. Compliance with these regulations will likely lead to increased use of HFCs to replace HCFCs, and is assumed to correspond to increased emissions of 20 percent in 2005, 15 percent in 2010, and 15 percent in 2020, relative to what the EU baseline otherwise would be (see Appendix A for an explanation of how these baseline refrigera tion and air-conditioning emissions are calculated before applying this adjustment). These relativ e emission increases were determined by running a Vintaging Model scenario wherein the uses of HCFCs were assumed to comply with the regulation.

• Recovery/recycling adjustments. The emissions from developi ng (or “non-Annex I”) countries, Countries with Economies in Transition (CEITs) and Turkey were increased by approximately 20 percent over initial estimates to reflect the assume d low levels of recovery and recycling of refrigerants from small end-uses (i.e., MVAC s, commercial/residential air-conditioning, refrigerated transport, and other appliances), rela tive to the United States. This assumed increase in emissions from lower levels of recovery/recycling was derived based on Vintaging Model test runs, wherein emissions were first projected assuming an 80-percent baseline recovery rate (to reflect the assumed status quo in developed countries) and then projected again assuming a 30- percent baseline recovery rate (to reflect the assu med status quo in developing countries). The GWP-weighted emissions in the latter low-re covery scenario were determined to be approximately 20 percent higher than the former hi gh-recovery scenario (ICF Consulting, 2002a).

• Market adjustments. The baseline assumes that hydrocarbon and ammonia refrigerants and other non-HFC or low-emitting options will penetr ate international markets more than in the United States, because of more relaxed safety st andards, greater acceptance of non-HFC choices by industry, end-users, regulators, and insurance companies, and increased public and regulatory scrutiny to reduce HFC emissions. To reflect this, baseline emission estimates of non-U.S. countries were reduced by the following amounts:

− European Union: 30%

− Japan: 30%

− Non-EU Europe: 25%

− CEITs: 20%

− Australia/New Zealand: 10%

− All Other Countries: 20%

These assumptions were based solely on qualitativ e information on current and future global market penetration of low-GWP refrigerants, as well as low-emission technologies and practices. For example, hydrocarbon technology is believe d to now dominate the domestic refrigeration market in Western Europe, particularly in Germany and Scandinavia. Hydrocarbon domestic refrigerators are produced by major manufacturer s in Germany, Denmark, Italy, Japan, UK, France, Spain, and Sweden. Some of the larg est manufacturers in China, India, Indonesia, Australia, Korea, and Cuba are also producing domestic refrigerators that use hydrocarbons (Greenpeace, 2001; Japan Times, 2002). To re flect this and many other trends, baseline emissions from non-U.S. countries are adjusted downwards as shown above.

• Redistribution of emissions by end-use, based on MVAC analysis. Based on a variety of
available data on international motor vehicle sal es, air-conditioning usage, and MVAC emissions, a separate analysis was conducted to estimate to tal MVAC emissions by region. These MVAC emission estimates by region were then used to determine the relative share of refrigeration/air-Analysis of Costs to Abate International ODS Substitute Emissions

-8- conditioning emissions attributable to MVACs, a nd to reapportion emissions from all other enduses accordingly, relative to the end-use brea kout calculated for the United States. The methodology used to perform this anal ysis is explained in detail below.

MVAC Analysis

Because MVACs are expected to account for a mu ch higher proportion of total refrigeration/AC emissions in the United States compared to most ot her developed and, especia lly, developing countries (due to the number of air-conditioned automobiles on the road), this end-use h as been modeled separately to achieve a higher degree of accuracy in emission estimates.

Specifically, for all countries for which data on hist orical vehicle sales were available in Ward’s World Motor Vehicle Data (2001), country-specific models we re developed to estimate emissions from MVACs. To populate this model, the number of operational M VACs was estimated based on annual historical sales of passenger cars and light trucks ( as provided in Ward’s (2001)) and on estimates of the percentage of the vehicle fleet equipped with air-conditioning units . Based on quantitative a nd qualitative data provided in EC (2003a), Hill and Atkinson (2003), OPROZ (2001) and Barbusse et al. (1998), Table 1-1 shows the percent of current and future vehicle fleets assume d to be equipped with op erational air-conditioning
units:

Table 1-1: Percent of On-Road Vehicle Fleet Assu med to Have Operational Air-Conditioning Units

Country/Region 2000 2005 2010 2015 2020 United States & Japan 95.0% 98.0% 99.0% 99.0% 99.0%

All Other Annex I countries 58.0% 65.5% 70.0% 80.5% 95.0%

Latin America & Caribbean 45.0% 50.0% 55.0% 60.0% 65.0%
All Other Non-Annex I countries, Russia, CEITs 18.0% 23.0% 28.0% 33.0% 38.0%

As shown above, MVACs in Japan are assumed to have reached the same degree of market penetration
within the vehicle fleet as in the United States. In all other countries, MVACs are assumed to increasingly penetrate the vehicle fleet over time. In developing countries, this rate of increase is assumed to be one percent each year, while in all othe r Annex I countries, the rate of increase is assumed to be more rapid, reaching 95 percent of the vehicl e fleet in 2020 (EC, 2003a; Hill and Atkinson, 2003).

Based on historical estimates of vehicle fleet size and assumptions about the percent of vehicle fleets with operational air-conditioners (Baker, 2002), current and future MVAC fleets were calculated for each country. From these estimates, MVAC emissions we re calculated by assuming that, as a result of low levels of refrigerant recovery a nd recycling, MVAC emissions in developing countries are approximately 20 percent greater than emission rates in the Unite d States (where annual average emissions for this analysis are assumed to be 10.9 percent 2 and emissions at disposal are assumed to be 42.5 percent of the total MVAC charge). 3 MVAC charge size and loss rates were decreased in later years, as it is assumed that MVAC systems become tighter and require less re frigerant over time. All systems are assumed to be
HFC-134a in the baseline.

Once MVAC emissions were estimated for those countries for which Ward’s data were available, the proportion of MVAC emissions as a percent of the tota l refrigeration/AC emissions (developed using the methodology described above) was calculated. These pe rcentages were then averaged by region. The

2 This emission rate includes emissions released during routine equipment operation from leaks, as well as those released during the servicing of equipment by both professionals and do-it-yourselfers.

3 While these emission rates differ slightly from those re ported in recent studies conducted for the European Commission (EC, 2003a; 2003b), overall MVAC emissions base d on U.S. EPA and EC es timates are comparable.Analysis of Costs to Abate International ODS Substitute Emissions

-9- average estimated percentage of refrigeration/ai r-conditioning GWP-weighted emissions that are attributable to MVACs by regional grouping are presented in Table 1-2.

Table 1-2: Estimated Percent of Refrigeration/Air-Conditioning HFC Em issions Attributable to MVACs Country/Region 2005 2010 2015 2020 United States & Japan 37.0% 28.5% 22.7% 19.5%

All Other Annex I Countries 48.7% 40.4% 20.5% 15.9%

Latin America & Caribbean 18.7% 16.2% 10.7% 7.8%
Russia, CEITs & All Other Non-Annex I Countries 9.5% 10.7% 10.9% 13.6%

Based on the above percent of sector baseline emis sions assumed to come from MVACs for each region, the U.S. baseline emissions breakout by end-use was used to proportionally redistribute the remaining emissions of a particular country/region. Thus, fo r example, because MVACs contribute only 4.0 percent
of total sector emissions in Latin American countries in 2005, the balance of emissions in Latin America was distributed across all other end-uses, in proportion to the U.S. end-use breakout. Therefore, if the
emissions in Latin America in 2005 were estimated to be 10 MMTCE, this analysis assumes that 0.4 MMTCE are from MVACs and the remaining 9.6 MMTCE are from other sector end-uses. The resulting breakout of baseline GWP-weighted HFC emissions by end-use and region are summarized in Table 1-3. These emission breakouts by end-use help determine the maximum amount of emissions that can be avoided by any given abatement option (since each option is applicable only to specific end-uses).

Table 1-3: Distribution of Refrigeration and Air-Condi tioning Sector HFC Emissions by End-use, Region, and
Year

End-use United States & Japan All Other Annex I Latin America &
Caribbean All Other Non-Annex I, Russia, CEITs

2005

Chillers 3.2% 2.6% 4.1% 4.6%

Retail Food 38.5% 31.3% 49.6% 55.3% Cold Storage 1.2% 1.0% 1.6% 1.7%

Industrial Process 4.5% 3.7% 5.8% 6.5%
Commercial A/C 0.7% 0.6% 0.9% 1.0%

Residential A/C 0.6% 0.5% 0.8% 0.9% Refrigerated Transport 13.8% 11.3% 17.9% 19.9% Other Appliances 0.5% 0.4% 0.6% 0.7%

MVACs 37.0% 48.7% 18.7% 9.5%

2010

Chillers 2.3% 1.9% 2.7% 2.9%

Retail Food 42.1% 35.1% 49.4% 52.6% Cold Storage 1.4% 1.2% 1.7% 1.8%

Industrial Process 6.1% 5.1% 7.1% 7.6%
Commercial A/C 3.7% 3.1% 4.4% 4.6%

Residential A/C 5.6% 4.7% 6.5% 7.0% Refrigerated Transport 9.8% 8.2% 11.5% 12.2% Other Appliances 0.4% 0.4% 0.5% 0.5%

MVACs 28.5% 40.4% 16.2% 10.7%

2015

Chillers 1.8% 1.9% 2.1% 2.1%

Retail Food 42.6% 43.9% 49.3% 49.2% Cold Storage 1.5% 1.5% 1.7% 1.7%

Industrial Process 6.6% 6.8% 7.6% 7.6%Analysis of Costs to Abate International ODS Substitute Emissions

-10- End-use United States & Japan All Other Annex I Latin America &
Caribbean All Other Non-Annex I, Russia, CEITs

Commercial A/C 6.4% 6.5% 7.3% 7.3%

Residential A/C 9.9% 10.2% 11.5% 11.4% Refrigerated Transport 7.4% 7.6% 8.6% 8.5% Other Appliances 1.0% 1.1% 1.2% 1.2%

MVACs 22.7% 20.5% 10.7% 10.9%

2020

Chillers 1.6% 1.6% 1.8% 1.7%

Retail Food 41.6% 43.5% 47.7% 44.7% Cold Storage 1.5% 1.6% 1.8% 1.6%

Industrial Process 7.0% 7.4% 8.1% 7.6%
Commercial A/C 8.3% 8.7% 9.6% 8.9%

Residential A/C 13.0% 13.6% 14.9% 14.0% Refrigerated Transport 6.5% 6.8% 7.5% 7.0% Other Appliances 0.8% 0.9% 1.0% 0.9%

MVACs 19.5% 15.9% 7.8% 13.6%
Note: Totals may not sum to 100% due to independent rounding.



### 1.2.2 Baseline Emissions

The amount of HFC emissions from MVAC units is expected to rise, since HFC-134a has been the primary refrigerant used in the growing automobile industry, and because it is the primary refrigerant used to replace older CFC-12 systems. The baseline for MVACs assumes a mix of professionally serviced systems and those serviced by unskilled people without recovery equipment (i.e., “do-ityourselfers”). Since commercial unitary and residen tial air-conditioning equipment has yet to transition fully into HFCs, the emissions of HFCs from thes e end-uses in 2005 are estimated to be relatively insignificant, but will increase substantially over time. Retail food systems are expected to transition at least in part to HFC-134a and HFC-containing blends, and because of certain equipment characteristics, such as their large number of fittings, often have higher refrigerant emission rates. Because of the relatively high cost of refrigerant and the large char ges associated with retail food equipment, the baseline assumes that an inherently strong economic incentive exis ts to closely monitor refrigerant leakage in these types of equipment. Cold storage systems also have large charge sizes, but their emissions relative to other refrigeration and air-conditioning end-uses ar e not expected to increase significantly. HFC emissions from chillers are relatively low as a resu lt of the continued use of HCFC-123 in this application, 4 as well as the low leak rates of new HFC- 134a units. The baseline emission projections assume that the recovery and recycling of refrigera nts during service and disposal in Annex I countries
will curtail emissions across all of the end-uses.

The resulting baseline estimates of HFC emissions are summarized in Table 1-4.

Table 1-4: Baseline HFC Emission Estimates from Refrigeration and Air-Conditioning (MMTCE) Region 2005 2010 2015 2020

United States 26.87 40.08 53.95 67.84

4 Note the emissions of all CFC and HCFC refrigerants, including HCFC-123, are not included in the baseline
emission estimates.Analysis of Costs to Abate International ODS Substitute Emissions

-11- Region 2005 2010 2015 2020

Non-U.S. Annex I 18.11 25.66 35.70 38.11

Non-Annex I 14.94 28.77 39.08 52.86

Total 59.92 94.50 128.73 158.80
Note: Totals may not sum due to independent rounding.



## 1.3 Costs of HFC Emission Reduction from Refrigeration/AC

This section presents a cost analysis for achievi ng HFC emission reductions from the emission baselines presented above. Each abatement option is described below, but only those options not assumed to occur in the baseline and for which adequate cost data are available are include d in the cost analysis. To the extent possible, this analysis considered total e quivalent warming impacts (TEWI), to account for the climate and cost impacts associated with energy cons umption (i.e., indirect emissions). Due to data limitations, a full life cycle analysis was not possible. For example, the cost and emission impacts associated with (a) the manufacture of refrigerant an d all system components, (b) the energy required for reclamation, and (c) the recycling of all system co mponents at the end of equipment life were not assessed in this analysis.

The remainder of this section provides a descriptio n of the economic assumptions for these abatement options.



### 1.3.1 Description and Cost Analysis of Abatement Options

HFC emissions from refrigeration and air-conditioning e quipment can be reduced through a variety of practice and technology options. Many of the options considered in this report would entail voluntary action by the private sector and/or further government regulation. For example, national governments can regulate maximum allowable leak rates for refrigeration and air-conditioning equipment, or require the recovery of refrigerant and the proper disposal of non-reclaimable refrigerant. Many Annex I countries have already implemented a variety of such regulat ory actions to reduce ODS emissions. Some of the most widely recognized options to reduce refrige rant emissions include the following (UNEP, 1998; UNEP, 1999a; Crawford, 1999; U.S. EPA, 2001a):

Practice Options:

• Leak repair;

• Refrigerant recovery and recycling;

• Proper refrigerant disposal; and

• Technician certification/HFC sales restriction

Alternative Refrigerant Options:

• Ammonia;

• Hydrocarbons;

• Low-GWP refrigerants; and

• Carbon dioxide.Analysis of Costs to Abate International ODS Substitute Emissions

-12- Technology Options:

• Distributed systems 5 for stationary commercial refrigeration equipment;

• Secondary loop systems for stationary equipment;

— HFC secondary loop systems

— Ammonia secondary loop systems

• Enhanced HFC-134a systems in MVACs;

• HFC-152a refrigerant in MVACs (direct expansion or secondary loop systems);

• Carbon dioxide systems in MVACs;

• Oil-free compressors;

• Geothermal (in lieu of air-to-air) cooling systems;

• Desiccant cooling systems; and

• Absorption systems.

Table 1-5 summarizes the duration and applicabilit y of the process and technology emission reduction options across all end-use applications considered in this analysis. The applicability of the alternative refrigerant options depends on the technology used; he nce, some are explored in more detail in the analysis of technology options.

5 The term “distributed system” as used in this report refers to commercial refrigeration equipment applicable to the retail food and cold storage end-uses, although the term could also be used to refer to technology applicable to other uses, such as residential and small commercial air-conditioning.Analysis of Costs to Abate International ODS Substitute Emissions-13-Table 1-5: Assumptions on Duration and Applicability of Emission Reduction OptionsPotential Applicability to End-use EquipmentOption Description Duration of EmissionReduction(years)Chillers RetailFoodColdStorageWarehousesRefrigeratedTransportIndustrialProcessRefrigerationCommercialUnitary A/CMVACs ResidentialA/CHouseholdRefrigerationand SmallAppliancesPractice OptionsLeak Repair 5 + + ++Refrigerant Recovery 1++ + + +Proper Refrigerant Disposal NATechnician Certification NAAlternative RefrigerantsAmmonia Lifetime of equipment+ +Hydrocarbons Lifetime of equipmentLow-GWP Refrigerants Lifetime of equipment+Carbon Dioxide Lifetime of equipment+Technology OptionsDistributed Systems for StationaryCommercial Refrigeration EquipmentLifetime of equipment + +Secondary Loop Systems for StationaryEquipment—HFC Primary RefrigerantLifetime of equipment + +Secondary Loops Systems for StationaryEquipment—Ammonia PrimaryRefrigerantLifetime of equipment + +Enhanced HFC-134a Systems in MVACs Lifetime of equipment +HFC-152a in MVACs (direct expansionor secondary loop)Lifetime of equipment +CO2in MVACs Lifetime of equipment +Oil-Free Compressors Lifetime of equipmentGeothermal (in lieu of air-to-air) CoolingSystemsLifetime of equipmentDesiccant Cooling Systems Lifetime of equipmentAbsorption Systems Lifetime of equipment+ Option is technically feasible and is addressed in the cost analysis of this report.Option is potentially feasible but is not addressed in the cost analysis of this report.Analysis of Costs to Abate International ODS Substitute Emissions

-14- The following section describes all of these options in gr eater detail and presents a cost analysis for those options not assumed to occur in the baseline and for wh ich adequate cost data ar e available. The resulting emission abatement potentials and costs of each option e xplored in the cost analysis are summarized in Section 1.4. The technology options explored in this chapter do not include retrofit costs and, therefore, are assumed to penetrate only the markets of new (not existing) equipment. “New” equipment is defined as air-conditioning/refrigeration equipment manufactured in 2005 or later.

Practice Options

Leak Repair for Large Equipment

Reducing leak rates can reduce HFC emissions to a si gnificant degree, especially in large systems such as chillers, cold storage warehouses, and retail food system s that could leak large amounts of refrigerant. Although some of the options available for exis ting equipment may be impractical for in-place equipment, given the difficulty and expense of retrofit ting, there are still many options available that are economically feasible. Some of the leak repair op tions used in current industry practice include (U.S. EPA, 1997; U.S. EPA, 1998; Calm, 1999):

• Use of preventive maintenance, includi ng scheduling inspection and repairs;

• Monitoring of leaks using stationary leak monitors or other new technologies, such as early warning signals, 6 remote monitoring, and diagnostics;

• Use of new, more durable gasket materials that provide tighter seals and absorb less refrigerant;

• Augmentation of threaded joints with О -ring seals;

• Augmentation or replacement of gaskets and О -rings with adhesive sealants;

• Broader use and improvement of brazing techniques ra ther than threaded or snap fittings (e.g., use of sufficient silver content, 7 and use of dry nitrogen or other inert gas to avoid oxidation);

• Focus on ensuring accessibility to field joints and u se of isolation valves, which allow for greater ease of repair;

• Focus on proper securing to reduce vibration fr actures in the pipe and connections from the compressor and other moving parts of the system;

• Repair or retrofit of high-emitting systems through targeted component upgrades; 8 and

• Performance of major modifications to the systems. 9

6 Technologies in the final stages of development expect to be able to generate early warning signals at less than five percent charge loss in commercial refrigeration and air-conditioning systems (Gaslok, 2002).

7 For solder, a 15-percent silver c ontent is recommended (U.S. EPA, 1997).

8 This option may include replacing the purge unit or other component upgrades that typically require the removal of refrigerant from the machine, two full days of two technici ans’ time, and several thousand dollars worth of materials (U.S. EPA, 1998).

9 This option may include modifications that are not strictly leak repair, but would result in greatly reduced leak rates. For example, combining the installation of a new purge system, the replacement of flare joints, and other containment options, or combining the replacement of gaskets and seals, th e replacement of the motor, and the installation of new refrigerant metering.Analysis of Costs to Abate International ODS Substitute Emissions

-15- As suggested by the above list, leak reduction op tions range from simple repairs to major system upgrades. Even in countries where maximum allowable leak rates are regulated by law, further leak reduction improvements, such as the replacement or upgrade of a major system component, are still possible. For example, preliminary data gathered fro m U.S. industry indicate that leak rates for certain types of existing equipment in the United States range from 8 to 40 percent, whereas achievable leak rates for new or modified equipment can be between 4 to 15 percent. Furthermore, through additional design and practice changes, leakage could be reduced to as low as 0.25 to 5 percent in the future (Amrane, 2001). Already, some retail food equipment has reached leak rates of less than 10 percent, and even lower for new chiller equipment (C rawford, 2002; Amrane, 2001).

Since the lower cost leak reduction options represent significant cost savings, th is analysis assumes that they occur under the baseline. The cost analysis therefore focuses only on the more extensive and costly options. This option is assumed to be technically appli cable to all equipment with large charge sizes (i.e., chillers, retail food, cold storage, and industrial process refrigeration). 10 This analysis assumes that 50 percent of emissions occur as a result of equipment leakage during routine operation, while the other 50 percent of emissions are released during equipment servicing and disposal. Thus, the maximum technical applicability of this option is assumed to be 50 pe rcent of emissions from large equipment (see Table 1-6). Furthermore, because equipment will still leak a marginal amount once repairs are made, it is assumed that the reduction efficiency of this option is 95 percent. The project lifetime is estimated to be five years. Regional technical applicability and re duction efficiency for 2010 and 2020 are presented in Table 1-6. Assumptions on maximum market penetra tion for each region and year are presented in Table
1-16.

Table 1-6: Summary of Assumptions fo r Leak Repair for Large Equipment Technical Applicability b Country/Region Applicable End-
Uses a Reduction Efficiency a 2010 2020 U.S. & Japan 26.0% 25.9%

Other Annex I 21.7% 27.0%

Latin America & Caribbean 30.5% 29.7%
Other Non-Annex I, Russia, CEITs Chillers

Retail food Cold storage Industrial process 95%

32.5% 27.8%

a End-Uses and Reduction Efficiency apply to all regions.

b Technical applicability is shown as a percent of total refrigeration/air-conditioning sector emissions, and equals 50 percent o f total refrigeration/air-conditioning emissions from chillers, retail food, cold storage, and industrial process refrigeration.

Cost and Emission Reduction Analysis

The following bullets describe the cost and emission inputs used to derive the final $/TCE for the leak repair option, the results of which are presented in Section 1.4:

• One-Time Costs. A one-time cost of $1,450 is assumed for performing more significant minor repairs on larger systems, such as maintenance of the purge system or replacement of a gasket or
О -ring, etc. This cost is based on an estimate provided in U.S. EPA (1998), adjusted to 2000 dollars, which assumes that $200 in parts and 16 hour s of labor is required to perform the repair.

• Annual Costs. No annual costs are associated with this option.

10 In this report, the term technically applicable refers to the emissions to which an option can be applied. The Leak Repair option is assumed to be technically applicable to all emissions from leaks (but not servicing and disposal) from the four end-uses listed in Table 1-6. See Appendix I for a glossary of terminology.Analysis of Costs to Abate International ODS Substitute Emissions

-16- • Cost Savings. An annual cost savings is associated with reduced refri gerant loss. The cost of refrigerant (assumed to be R-404A) is estimated to be $18.41/kg, 11 and 43 kg of refrigerant per unit are assumed to be saved each year, resulting in an annual cost savings of approximately $791.63 per unit.

• Emission Reductions. Under the leak repair option described above, approximately 43 kg of R404A refrigerant can be avoided each year for five years, resulting in an annual emission reduction of approximately 36 TC E per job (i.e., 43 kg or 0.043 metric tons of refrigerant, multiplied by the GWP of 3260, the reduction efficien cy of 0.95, and the conversion factor of carbon to carbon dioxide equivalents of 12/44).

Refrigerant Recovery and Recy cling from Small Equipment

Recovery and recycling of HFCs help to decrease HFC emissions during equipment service and disposal. The approach involves the use of a refrigerant recovery device that transfers refrigerant into an external storage container prior to servicing of the equipmen t. Once the recovery process and source operations are complete, the refrigerant contained in the st orage container may be recharged back into the equipment, cleaned through the use of recycling de vices, sent to a reclamation facility to be purified, 12 or disposed through the use of incineration technologies. Refrigerant recovery may also be an important way to reduce emissions from near-empty refrigerant cont ainers (i.e., can heels). Refrigerant recovery is assumed to be widely practiced in Annex I countries in the baseline, as it is typically required by law.

This analysis assesses the recovery of refrigerant a bove that which is already practiced (e.g., due to regulations in many developed countries or for eco nomic reasons) at service and disposal only for small equipment—i.e., MVACs, refrigerated transport, h ousehold and other small appliances, and unitary equipment—because it is assumed that recovery from larg e equipment is already widely practiced in the
baseline. 13 Recovery for large equipment is assumed to be practiced in the baseline because of the significant cost savings associated with recovery of large quantities of refrigerant from this equipment. Because emission reductions and costs vary by scen ario and end-use, emission reductions and costs associated with four recovery scenar ios were averaged to obtain one br eak-even cost. The four scenarios studied are recovery/recycling of (1) MVACs at servi ce, (2) MVACs at disposal, (3) small appliances at service, and (4) small appliances at disposal.

This analysis assumes that 50 percent of emissions are released during equipment servicing and disposal, while the remaining 50 percent occur as a result of l eakage during normal operations. Thus, the technical applicability of this option is 50 percent of em issions from small equipment (see Table 1-7). Furthermore, because in the United States small applia nces are considered completely recovered when 90 percent of the refrigerant is rem oved from units with running compressors, or when 80 percent of the refrigerant is removed from units with non-operating compressors, this analysis assumes that the reduction efficiency of this option is 85 percent (Contracting Business Interactive, 2003; U.S. EPA, 1993). The project lifetime is assumed to be one y ear. Regional technical applicability and reduction

11 Cost of R-404A is based on the list price quoted by DuPont Customer Service (2004).

12 Recycling cleans, and reclamation purifies, recovered refrigerant; reclamation is more thorough and involves repeated precision distillation, filtering, and contaminant rem oval. Recycling is used for onsite servicing of MVACs and other equipment and reclamation requires send ing the refrigerant offsite to a reclaimer.

13 While the Society of Automotive Engineers (SAE) has issued industry standards on equipment and technician procedures that apply to MVACs and provide for on-site recovery/recycling of HFC-134a from MVAC systems for reuse in the serviced system, recovery from these and other small systems is still not believed to be widely practiced in most developing countries, as a result of a lack of infrastructure (i.e., recovery /recycling equipment) (World Bank, 2002).Analysis of Costs to Abate International ODS Substitute Emissions

-17- efficiency for 2010 and 2020 are presented in Table 1- 7. Recovery of small appliances and MVACs is assumed to be practiced at 80 percent in the baseline in developed countries and at 30 percent in the baseline in developing countries. Assumptions on maximum market penetration for each region and year are presented in Table 1-16.

Table 1-7: Summary of Assumptions for Recovery/Recycling fr om Small Equipment

Technical Applicability b Country/Region Applicable End-Uses a Reduction Efficiency a 2010 2020 U.S. & Japan 24.0% 24.1%

Other Annex I 28.3% 23.0%

Latin America & Caribbean 19.5% 20.3%
Other Non-Annex I, Russia, CEITs MVACs Refrigerated transport Household/ other small appliances Commercial unitary AC

Residential AC 85%

17.5% 22.2%

a End-Uses and Reduction Efficiency apply to all regions.

b Technical applicability is shown as a percent of total refrigeration/air-conditioning sector emissions, and equals 50 percent o f total refrigeration/air-conditioning emissions from MVACs, refrigerat ed transport, household/other small appliances, and commercial u nitary and residential air-conditioning.

Cost and Emission Reduction Analysis

The following bullets describe the cost and emission inputs used to derive the final $/TCE for the refrigerant recovery option, the results of which are presented in Section 1.4:

• One-Time Costs. The one-time cost associated with this option is the cost of recovery and/or recovery/recycling equipment, which ranges based on the equipment type. While all costs were expressed in terms of cost per job (see below), the cost of a high-pressure recovery unit is assumed to be approximately $815, based on the av erage cost of four recovery scenarios: (1) recovery from MVACs at service; (2) recovery from MVACs at disposal; (3) recovery from stationary equipment at service; and (4) recovery from stationary equipment at disposal (U.S. EPA, 1998; 2001b).

• Annual Costs. All costs associated with this option, including capital costs, were expressed in terms of cost per job. The cost per job was ca lculated by multiplying the average additional labor required by the technician to recover the refrige rant charge (from five to 10 minutes, depending on recovery scenario) by the average labor rate ($50/hr) and the average operating costs (which incorporates both the annualized costs of e quipment and energy use). Based on this methodology, the average job is estimated to cost approximately $9.50 (U.S. EPA, 1998; 2001b).

• Cost Savings. As a result of the average cost of recovered refrigerant (R-134a, R-404A, and R407C)—calculated to be $11.32/kg (the averag e for the four scenarios described above, considering the likely refrigerants involved)—and an average recoverable charge of 0.83 kg (the average of the four recovery scenarios describ ed above, considering the 85-percent reduction efficiency), this option is associated with a co st savings of approximat ely $9.40 per job.

• Emission Reductions. Under the refrigerant recovery op tion described above, the emission of 0.83 kg of refrigerant can be avoided from sm all equipment, resulting in the reduction of approximately 0.38 TCE per recovery jo b (assuming an average GWP of 1,664). 14

14 This GWP value is based on an average GWP for MVAC s and stationary equipment, where the average GWP for MVACs is assumed to be 1,300 (R-134a), and the average GWP for stationary equipment is assumed to be 2,028.5 (R-134a, R-404A, and R-407C). Therefore, the calculation is: [1300+ (1300 + 3260 + 1525.5)/3]/2 = 1664.25Analysis of Costs to Abate International ODS Substitute Emissions

-18- Proper Refrigerant Disposal

One potential source of emissions from the refrigerati on and air-conditioning sector is the accidental or deliberate venting of refrigerant. The venting of re frigerant can be reduced by increasing the reclamation of used refrigerant (discussed in more detail below) and properly disposing of refrigerant that cannot be reclaimed (such as highly contaminated refrigerant or mi xed refrigerant). Disposal costs vary by country and region, as do transportation costs, storage costs, and access to refrigerant disposal facilities (e.g., high temperature incinerators that handle refrigerants). Global average ODS destructi on costs are estimated to vary between $1.80 and $2.70 per pound (approximately $4 to $6 per kilogram) (ICF Consulting, 2002b). This option was not explored in the cost analysis as a result of the uncertainty associated with access to disposal facilities and cost disparities within regions.

Technician Certification/HFC Sales Restriction

By ensuring that refrigeration/air-c onditioning technicians receive traini ng in proper refrigerant handling, including recovery/recycling practices, and/or by restricting the sale of HFC refrigerants to certified technicians only, refrigerant emissions can be redu ced. In some countries, such as the United States,
technicians must be certified in accordance with national regulations to purchase CFC and HCFC refrigerants and service refrigeration and air-conditioni ng equipment. Restricting the use of HFC refrigerants to certified technicians would simila rly reduce emissions. The costs of promulgating regulations in individual countries are uncertain and highly variable, and hence, this option was not explored further.

Alternative Refrigerant Options

Ammonia

Ammonia, primarily used in water-cooled chillers, has excellent thermodynamic properties and can be used in many types of systems. In addition, it has the advantage of having a strong odor, which makes refrigerant leaks easier to detect, and is lighter than air, facilitating dispersion in the event of a release (UNEP, 1999a). However, it must be used carefull y, because it is toxic and slightly flammable. Ammonia is an explosion hazard at 16 to 25 percent in air, which creates a problem in confined spaces. Chillers that use ammonia as a refrigerant are commerc ially available in Europe and elsewhere, and they have efficiencies that are comparable to those of HF C-134a chillers in some instances. Building and fire codes, however, restrict the use of ammonia in the urban areas of the United States and many other countries. These safety concerns and institutional ba rriers effectively limit the potential for expanded use of ammonia chillers (Sand et al., 1997).

While the use of ammonia within public spaces such as supermarkets is limited in some countries by building codes and ordinances, it is a potential alternative for supermarkets if safety concerns can be adequately addressed through engineering design such as secondary loops and isolation. Indeed, modern ammonia systems manufactured in the United States are fully contained closed-loop systems with fully integrated controls that regulate pressures throughout th e system. Also, all systems are required to have an emergency diffusion system and a series of safety relief valves to protect the system and its pressure vessels from over-pressurization and possible failure (A SHRAE, 2002). Systems with ammonia are being built and used in Europe (Sand et al., 1997). Howe ver, the further use of ammonia as a supermarket primary refrigerant may be unlikely in the near fu ture in the United Kingdom and other countries because of the capital costs and issues of compliance with standards and safety regulations (Cooper, 1997). Ammonia would also be an option in some industrial process refrigeration and cold storage applications, contingent upon addressing all of th e relevant concerns regarding flammability and toxicity. ForAnalysis of Costs to Abate International ODS Substitute Emissions

-19- example, ammonia is used in about 80 percent of curre nt installations of large-size refrigeration plants, as well as many indirect commercial refrigeration systems (RTOC, 2003).

The chemical properties of ammonia make it incompa tible with current designs of residential light commercial unitary air-conditioning systems, which u se copper for the refrigerant tubing, in the heat exchangers and in other components. Ammonia in the presence of water cannot be used with copper or zinc (UNEP, 1999a); however, ammonia can be used in aluminum and steel systems. Compatible components would have to be developed to use ammonia. As a result of these technical and cost barriers, as well as ammonia’s flammability and toxicity, ammonia is considered an unlikely candidate for use in commercial and residential unitary equipment (Sand et al., 1997).

Many of the existing uses of ammonia are included in the baseline analysis. One additional option— using ammonia secondary loop systems in retail food and cold storage end-uses—is analyzed in more detail below, in the section on Technology Options.

Hydrocarbons

Hydrocarbons have thermodynamic properties comparable to fluorocarbons that make them good refrigerants; however, their high flammability causes safety concerns. Considering technical requirements apart from safety, there is potential fo r use of hydrocarbons in retail food refrigeration, refrigerated transport, household refrigeration, residential air-cond itioning, MVACs, and commercial unitary systems. Currently used refrigerants in clude HC-600a, HC-290, and HC-1270 (UNEP, 1999a). In addition to good thermodynamic properties, hydro carbons also have other advantages such as energy efficiencies comparable to fluorocarbons, zero ODP, and very low direct GWP.

The primary disadvantage of hydrocarbons is flamma bility, resulting in significant safety and liability
issues. This causes increased cost s for safety precautions in factories and can necessitate design changes in every application, such as relocation of electrical components to reduce the likelihood of accidents from potential leaks (Kruse, 1996; Paul, 1996). This al so entails additional ha rdware costs for many applications (ADL, 1999; Crawford, 2000). Hydrocarbon re frigerant use is generally restricted by U.S. safety codes, and with the exception of industrial re frigeration, the U.S. EPA has not listed hydrocarbons as acceptable substitutes to ODS refrigerants (per S ection 612 of the Clean Air Act Amendments of 1990). Even if systems that are designed to use hydr ocarbon refrigerants were listed, liability concerns would remain. Systems using flammable refrigerant s will require additional e ngineering and testing, development of standards and service procedures, a nd training of manufacturing and service technicians
before commercialization.

Hydrocarbon domestic refrigerators have been availa ble in Western Europe since the early 1990s, and have now fully penetrated some of the new domestic refrigeration markets, such as that in Germany. Hydrocarbon domestic refrigerators are also available in Argentina, Australia, Braz il, China, Cuba, India, Indonesia, Japan and elsewhere. Similarly, hydr ocarbon refrigerants are available in other products, although little information is readily available regardi ng their market success to date (Hydro Cool Online, 2002; Calor Gas Refrigeration website , 2004; CARE Web site, 2004).

In addition, hydrocarbons have been used in MVACs for the last several years. Some have estimated that, in certain parts of Australia, 280,000 vehicles contain hydrocarbon refrigera nts (Greenchill website, 2000), although independent data have not been s upplied to confirm that estimate. The use of hydrocarbon refrigerants in direct expansion system s not designed for a flammable refrigerant can pose safety concerns and is not considered acceptable by mu ch of the global MVAC industry. The Society of Automotive Engineers’ (SAE) Altern ate Refrigerant Cooperative Resear ch Program has demonstrated aAnalysis of Costs to Abate International ODS Substitute Emissions

-20- secondary loop system using hydrocarbon refrigerant th at minimizes the possible release of flammable refrigerant into the passenger compartment (Hill and Atkinson, 2003).

Proponents of hydrocarbon systems claim that these systems bring numerous benefits, including increased energy efficiency, lower refrigerant cost, lowe r capital cost, and less noise (HyChill website, 2004; Greenchill website, 2000), although little independent resear ch exists to confirm the veracity of these claims. In many parts of the world, however, safety issues, public perception, and manufacturer acceptance impedes further penetration of this option.

This analysis does not consider the use of hydro carbons in household refrigeration because it is assumed that this option is reaching maximum market penetr ation in the baseline. In those regions where hydrocarbons have not successfully penetrated ma rkets (e.g., North America), it is assumed that the perceived risk and lack of acceptance of hydrocarbon refrigerants, which has prevented adoption to date,
will continue to serve as a barrier in the foreseeable future. The use of hydrocarbons in other refrigeration
end-uses was not considered further due to uncertain ty concerning price and likely market penetration.

Low-GWP Refrigerants

The use of low-GWP refrigerants (e.g., HFC-152a with a GWP of 140) in place of higher GWP refrigerants (e.g., HFC-134a with a GWP of 1,30 0) is another option fo r reducing greenhouse gas emissions to the atmosphere. The use of HFC-152a in MVACs is explored in this cost analysis, as described in detail on page 28.

Several other low-GWP refrigerants exist. For ex ample, carbon dioxide, discussed further below, has a GWP of 1. In addition, HCFC-123 and HCFC-124, wh ich are not considered alternatives to HFCs, have low direct GWPs, complicated by factors including thei r contribution to stratospheric ozone depletion. While some studies (Calm et al., 1999; Wuebbl es and Calm, 1997; U.S. EPA, 2002; RTOC, 2003) suggest the extended use of HCFC-123 in large tonnage chillers may offer a means to reduce direct GWPweighted refrigerant emissions, and in some inst ances may reduce overall greenhouse gas emissions, this option is not examined in this analysis, as full co mpliance with the current HCFC phase-out schedule is
assumed.

Carbon Dioxide

Another option is to use carbon dioxide as a refrigerant. Prototype carbon dioxide 

### systems have been developed for numerous types of systems, including MVACs, industrial processing, refrigerated transport, and retail food systems. Carbon dioxide has zero ODP and a GWP of 1, and is claimed by its proponents to be advantageous for use as a refrige rant. However, carbon dioxide is associated with potential safety risks and other technical/economic disadvantages. Above certain concentrations, exposure to carbon dioxide may result in adverse health consequences. At very high concentrations, even for short periods of time, carbon dioxide affects the central nervous system and is an asphyxiant. To protect against adverse health effects from workpl ace exposure, the Occupational Safety and Health Administration’s (OSHA) recommended 8-hour time-w eighted average exposure limit is 5,000 ppm (ACGIH, 1999). Also, carbon dioxide systems operate at high pressure, which presents a potential hazard and may increase the cost of designing and purchasing equipment. In addition, potential loss of operational efficiency and associated increases in energy use and indirect emissions, refrigerant containment issues, long-term reliability, and compressor performance are other potential problems (Environment Canada, 1998).Analysis of Costs to Abate International ODS Substitute Emissions

-21- For this analysis, carbon dioxide systems are only ev aluated as options for MVACs. Carbon dioxide is being investigated for use in other end-uses but, due to the early stage of development and a lack of available information, those end-uses are not explored in this analysis. The MVAC option is described in detail in the section on Technology Options.

Technology Options

Distributed Systems for Stationary Commercial Refrigeration Equipment

A distributed system consists of multiple compressors that are distributed throughout the store near the display cases they serve and are connected by a water loop to a single cooling unit that is located on the roof or elsewhere outside of the store. Refrigerant charges for distributed systems can be smaller than the refrigerant charge used in a comparable traditional ce ntralized direct expansion (DX) system. Significant reductions in total global warming impact from current levels may be possible with distributed systems that use HFC refrigerants (Sand et al., 1997). Reduced refrigerant charge sizes, in addition to increased energy efficiency associated with such systems, coul d effectively decrease global warming impacts, even with the use of fluorocarbon refrigerants.

Using HFC distributed systems in lieu of HFC centra lized DX systems in retail food settings offers the potential to reduce HFC emissions. Distributed systems have smaller refrigeration units distributed among the refrigerated and frozen food display cases, w ith each unit sending heat to a central water cooling system. A distributed system would significantly reduce the refrigerant inventory and minimize the length of refrigerant tubing and the number of fitti ngs that are installed in direct expansion systems, thereby reducing leaks of HFCs (ADL, 2002).

This technology option is assumed to be applicable to the retail food and cold storage end-uses. The project lifetime is assumed to be 20 years, and th e emission reduction efficien cy is calculated to be approximately 93 percent (i.e., the reduced leakage from use of a distributed system divided by the leakage of the baseline system, or (0.15 - 0.04 × 0.25)/0.15). This calculation is based on an assumed annual leak rate of 4 percent (compared to 15 percen t for centralized direct expansion [DX] systems), and a charge size that is 75 percent less than centr alized DX systems (ADL, 2002). Regional technical applicability and reduction efficiency for 2010 and 2020 are presented in Table 1-8. Assumptions on maximum market penetration for each region and y ear are presented in Table 1-16 and Table 1-17. Because the cost analysis for this option does not address the costs to retrofit existing DX systems, this option is assumed to penetrate only new (post-2004) re tail food and cold storage installations (i.e., those installed in 2005 or beyond).

Table 1-8: Summary of Assumptions for Distri buted Systems for New Stationary Equipment Technical Applicability b Country/Region Applicable End-Use Sector(s) a Reduction Efficiency a 2010 2020 U.S. & Japan 43.6% 43.1%

Other Annex I 36.3% 45.1%

Latin America & Caribbean 51.0% 49.4%
Other Non-Annex I, Russia, CEITs Retail food Cold storage 93%

54.4% 46.3%

a End-Uses and Reduction Efficiency apply to all regions.

b Technical applicability is shown as a percent of total refrigeration/air-conditioning sector emissions, and equals the percent of total refrigeration/air-conditioning emissions that are assumed to come from retail food and cold storage end-uses.Analysis of Costs to Abate International ODS Substitute Emissions

-22- Cost and Emission Reduction Analysis

The following bullets describe the cost and emission i nputs used to derive the final $/TCE for distributed systems, the results of which are presented in Sec tion 1.4. For more information on the calculation of costs and emission savings of this alternative refri geration technology, see Section 1.3.2 on “Calculation of Indirect Emissions and Costs for Options Applicable to Stationary Equipment.”

• One-Time Costs. HFC distributed systems are assumed to cost approximately $300 per ton of cooling capacity to install, or $100 more per ton of cooling capacity than conventional HFC centralized DX systems (U.S. EPA, 2001a).

• Annual Costs. There are no annual costs associated with this option.

• Cost Savings. Based on average electricity prices in the United States from 1994-1999 (EIA, 2000), this option is associated with an annual cost savings of $5.72 per ton of cooling capacity in the United States, as a result of an approximately 8 percent increase in energy efficiency relative to centralized DX systems (ADL, 2002). In all other countries, this annual cost savings was adjusted by average electricity prices (average of 1994-1999) based on EIA (2000). In addition, this system will prevent the annual emission of n early 0.32 kg of refrigerant per ton of cooling capacity, as a result of reduced leakage. Assuming an average cost of (R-404A) refrigerant of $18.41/kg (DuPont Customer Service, 2004), this translates into annual cost savings of approximately $5.85 per ton of cooling capacity. Combined, the annual cost savings associated with this option is $11.56 per ton of cooling capacity.

• Emission Reductions. Because the distributed system described above use less energy than a typical DX system, less carbon dioxide is produced in generating electricity to run it. This indirect energy benefit is calculated to be a pproximately 0.02 TCE per ton of cooling capacity each year, using average power plant emission rates in the United States. In all other countries,
the indirect emission benefit was calculated by multiplying the 0.02 TCE emission reduction calculated for the United States by a ratio of U.S. to regional or national average CO2 emission rates for electricity production, based on Sand et al. (1997). The reduction of direct emissions of approximately 0.32 kg of refrigerant equates to approximately 0.28 TCE per ton of cooling capacity per year. Therefore, in the United States, total annual emission reduction associated with this option is estimated to be 0.31 TCE per ton of cooling capacity. Furthermore, as a result of avoided losses at disposal (assumed to be 56 pe rcent of original charge), a further 0.89 kg of refrigerant emissions could be avoided per ton of cooling capac ity, equal to a one-time emission reduction of 0.79 TCE per ton of cooling capacity.

Secondary Loop Systems for Stationary Equipment

Secondary loop systems pump cold fluid to remove heat from equipment (e.g., refrigerated food display cases) or areas to be cooled. The fluid, often a brine solution, passes through a heat exchanger to be cooled by a refrigerant isolated from the equipment or areas cooled. These systems require a significantly lower refrigerant charge, have lower leak rates, and can allow the use of flammable or toxic refrigerants.

Secondary loops may be used in commercial and industr ial refrigeration applications, for example, to cool supermarket display cases without circulating toxic or flammable refrigerants throughout the store or to reduce the needed charge of HFC refrigerants. Th e primary disadvantages of the secondary loop system can be a loss of energy efficiency and higher capita l costs. Potential benefits of secondary cooling systems, however, include decreased charge sizes, decr eased leak rates, faster defrost, lower maintenance needs, and longer shelf lives, which can result in significant cost-savings over time (Bennett, 2000; Baxter, 2003; Faramarzi and Walker, 2003). Indeed, the reduction in size and leak rate of the refrigerant charge could result in a reduced global warming impact , even with the use of fluorocarbon refrigerants.Analysis of Costs to Abate International ODS Substitute Emissions

-23- The use of zero GWP refrigerants could result in ev en lower global warming im pacts (Sand et al., 1997). Furthermore, secondary loop systems have improved temperature control compared to conventional direct expansion systems, which can represent an important advantage in countries like the United States, where recent regulations on temperature control for refrigera ted products such as meat, poultry, and fish have become more stringent. Moreover, recent technological improvements to secondary cooling systems, such as high-efficiency evaporative condensers and display cases with high temperature brines, have increased system efficiency (Baxter, 2003; Farama rzi and Walker, 2003). Two types of secondary loop systems, for use in retail refrigeration and cold stor age warehouses, are analyzed in more detail below.

Secondary loops could mitigate some but not all of th e risks of using flammable refrigerants in residential and commercial unitary end-uses. In addition, secondary loops also have potential applications in motor vehicle air-conditioning, discussed further under the op tion of “HFC-152a Refrigerant in MVACs.” Due
to the lack of technical and cost information on sec ondary loop systems in these other applications, they are not included as options in this analysis.

HFC Secondary Loop Systems for Stationa ry Commercial Refrigeration Equipment

Designing new retail food and cold storage systems to operate using secondary loops with HFCs can also reduce HFC emissions. As discussed above, secondary loop systems circulate a secondary coolant or brine from the central refrigeration system to the display cases (UNEP, 1999a; ADL, 1999). These systems have lower leak rates and operate at reduced charges. Additionally, pi pes used in these systems are now pre-manufactured and can be made of pre-in sulated plastic instead of copper. This reduces material costs and, by eliminating the need for brazing, allows for faster installati on. In the United States, installation costs have been reduced by more than 25 percent in recent years. With continued research and development, it is expected that this technology will soon be as cost-effective to purchase, install, and operate as centralized DX systems (Bennett, 2000). This technology option is assumed to be applicable to the retail food and cold storage end-use sectors. This option is assumed to reduce emissions from appropriate end-uses by up to 98.5 percent, based on an assumed charge of only 11 percent of the base case (centralized DX systems) and an annual leak ra te of 2 percent compared to 15 percent for an “optimal installation” of a centralized DX system (ADL , 2002). The project lifetime is assumed to be 20 years. The regional technical applicabilities and reduction efficiencies for 2010 and 2020 are presented in Table 1-9. Assumptions on maximum market penetra tion for each region and year are presented in Table 1-16 and Table 1-17. Because the cost analysis fo r this option does not address the costs to retrofit existing DX systems, this option is assumed to pe netrate only new (post-2004) retail food and cold storage installations (i.e., those installed in 2005 or beyond).

Table 1-9: Summary of Assumpti ons for HFC Secondary Loop Systems for New Stationary Equipment Technical Applicability b Country/Region Applicable End-Use Sector(s) a Reduction Efficiency a 2010 2020 U.S. & Japan 43.6% 43.1%

Other Annex I 36.3% 45.1%

Latin America & Caribbean 51.0% 49.4%
Other Non-Annex I, Russia, CEITs Retail food, Cold storage 98.5%

54.4% 46.3%

a End-Uses and Reduction Efficiency apply to all regions.

b Technical Applicability is shown as a percent of total refrigeration/air-conditioning sector emissions, and equals the percent of total refrigeration/air-conditioning emissions that are assumed to come from equipment t in the retail food and cold storage end-uses

. Cost and Emission Reduction Analysis

The following bullets describe the cost and emission inputs used to derive the final $/TCE for HFC secondary loop systems, the results of which are presen ted in Section 1.4. For more information on theAnalysis of Costs to Abate International ODS Substitute Emissions

-24- calculation of costs and emission savings of this alte rnative refrigeration technology, see Section 1.3.2 on “Calculation of Indirect Emissions and Costs for Options Applicable to Stationary Equipment.”

• One-Time Costs. This option is assumed to cost approxi mately $240 per ton of cooling capacity to install, or $40 (20 percent) more than conve ntional centralized HFC direct expansion systems (Bennet, 2000; Smithart, 2000; ADL, 1999). Improved secondary loop systems now being manufactured may be associated with even lowe r cost premiums—ranging from 0 to 10 percent more expensive than conventional centralized DX systems (Kazachki, 2004). Such systems may be considered in future analyses.

• Annual Costs. Based on average electricity prices in the United States from 1994-1999 (EIA, 2000), this option is associated with an annual cost of $11.43 per-ton of cooling capacity, as a result of an approximately 15 percent increase in energy consumption relative to centralized DX systems (ADL, 2002). In all other countries, this an nual cost was adjusted by average electricity prices (1994-1999) based on EIA (2000). Annual energy costs may actually be much lower if energy saving features are applied. Indeed, new secondary loop systems with improved design features (e.g., use of evaporative condensing) may result in annual energy requirements that are roughly the same as those for conventional DX syst ems, or even lower (Kazachki, 2003; Baxter, 2003). Such systems may be cons idered in future analyses.

• Cost Savings. On a per-ton of cooling capacity basis, th is system will prevent nearly 0.34 kg of refrigerant emissions each year in the United Stat es, as a result of reduced leakage. Assuming an average cost of (R-404A) refrigerant of $18. 41/kg (DuPont Customer Service, 2004), this translates into an annual cost savings of $6.17 per ton of cooling capacity.

• Emission Reductions. Under the HFC secondary loop system described above, the annual direct emission of nearly 0.34 kg (0.30 TCE) of refrige rant can be avoided annually per ton of cooling capacity. However, indirect emission (energy) penalties lower total emission benefits by more than 15 percent (approximately 0.05 TCE per ton of cooling capacity) in the United States. In all other countries, the indirect emission penalty was calculated by multiplying the 0.05 TCE emission penalty assumed for the United States by a ratio of U.S. to regional or national average CO2 emission rates for electricity production, b ased on Sand et al. (1997). Additional emission benefits are also associated with this option as a result of avoided (R-404A) refrigerant losses at equipment disposal. Assuming an emission rate of 56 percent at disposal, a further 1.11 kg of refrigerant emissions could be avoided per ton of cooling capac ity, equal to a one-time emission reduction of 0.99 TCE per ton of cooling capacity.

Ammonia Secondary Loop Systems for Statio nary Commercial Refrigeration Equipment

The use of ammonia is very common in certain countries while strongly restricted in others. For example, for many decades ammonia has been used in almost all dairies, breweries, slaughterhouses, and large freezing plants nearly all over Europe, while its use is heavily regulated in North America (ACHR News, 2000). Ammonia refrigeration has historically been used in large, low-temperature industrial refrigeration, as well as medium and large chillers , generally in food processing (Crawford, 1999). However, the use of ammonia refrigerant is beginning to expand into retail food and smaller-sized chillers in some countries, particularly those in the European Union.

Because of ammonia’s toxicity and flammability, ma jor design modifications would be required for the majority of traditional HFC systems. Furthermore, since different countries have different sets of building codes, fire codes, and other safety sta ndards relating to the use of ammonia in building equipment, some countries (e.g., the United States) w ould need to revise those codes to allow for the expanded use of ammonia in new equipment types.Analysis of Costs to Abate International ODS Substitute Emissions

-25- Ammonia can be used as the primary refrigerant in secondary loop systems in place of HFCs. Because ammonia secondary loop systems avoid running the pr imary refrigerant through miles of piping to and from food storage cases, they have lower leak rat es than conventional centralized DX systems, and operate at reduced charges. In these types of systems, ammonia is kept out of public contact (e.g., outside of buildings), and non-toxic fluids are used as se condary coolants. Increm ental one-time costs for ammonia systems are assumed to in clude expenditures for equipment n eeded to ensure safety. The annual operating costs also include net energy requireme nts, but, because of a lack of information, do not cover costs associated with training of technicians and development and updating of safety protocols to handle more hazardous refrigerants such as ammonia. Th is technology option is assumed to be applicable to the retail food and cold storage end-uses. The project lifetime is assumed to be 20 years. The reduction efficiency of this option is 100 percent, as the ammonia completely replaces the HFC. Because the cost analysis for this option does not address the costs to retrofit existing DX systems, this option is assumed to be technically applicable in only new (p ost-2004) retail food and cold storage installations.

Table 1-10 presents regional technical applicabilities and the reduction efficiency for 2010 and 2020.

Table 1-10: Summary of Assumptions for Ammonia Secondary Loop System s for New Stationary Equipment Technical Applicability b Country/Region Applicable End-Use Sector(s) a Reduction Efficiency a 2010 2020 U.S. & Japan 43.6% 43.1%

Other Annex I 36.3% 45.1%

Latin America & Caribbean 51.0% 49.4%
Other Non-Annex I, Russia, CEITs Retail food Cold storage 100%

54.4% 46.3%

a End-Uses and Reduction Efficiency apply to all regions.

b Technical Applicability is shown as a percent of total refrigeration/air-conditioning sector emissions, and equals the percent of total refrigeration/air-conditioning emissions that are assumed to come from equipment in the retail food and cold storage end-uses.

Ammonia systems are assumed to penetrate a greater pe rcentage of non-U.S. markets, as a result of more relaxed safety standards and greater acceptance by in dustry, end-users, regulators, and insurance companies in those countries. Assumptions on maxi mum market penetration for each region and year are presented in Table 1-16 and Table 1-17.

Cost and Emission Reduction Analysis

The following bullets describe the cost and emission in puts used to derive the final $/TCE for ammonia secondary loop systems, the results of which are presen ted in Section 1.4. For more information on the calculation of costs and emission savings of this alte rnative refrigeration technology, see Section 1.3.2 on “Calculation of Indirect Emissions and Costs for Options Applicable to Stationary Equipment.”

• One-Time Costs. Ammonia secondary loop systems are assumed to cost approximately $250 per ton of cooling capacity to install, or $50 (25 pe rcent) more than conventional centralized HFC direct expansion systems (Anderson, 2001).

• Annual Costs. Based on average electricity prices in the United States from 1994-1999 (EIA, 2000), this option is associated with an annual co st of $11.43 per ton of cooling capacity, as a result of an approximately 15 percent increase in energy consumption relative to centralized DX systems (ADL, 2002). In all other countries, this an nual cost was adjusted by average electricity prices (1994-1999) based on EIA (2000). Note th at next generation ammonia secondary loop systems may adopt energy saving features that yi eld lower annual energy costs, as discussed above for HFC secondary loop systems.Analysis of Costs to Abate International ODS Substitute Emissions

-26- • Cost Savings. On a per-ton of cooling capacity basis, this system will prevent 0.34 kg of refrigerant emissions each year in the United Stat es, as a result of reduced leakage. Assuming an average cost of (R-404A) refrigerant of $18. 41/kg (DuPont Customer Service, 2004), this translates into an annual cost savings of $6.26 per ton of cooling capacity.

• Emission Reductions. Under the ammonia secondary loop system described above, the annual emission of 0.34 kg (0.30 TCE) of refrigerant can be avoided annually in the United States per ton of cooling capacity. However, indirect em ission (energy) penalties lower total emission benefits by more than 15 per cent (approximately 0.05 TCE per ton of cooling capacity) in the United States. In all other countries, the indir ect emission penalty was calculated by multiplying the 0.05 TCE emission penalty assumed for the Unite d States by a ratio of U.S. to regional or national average CO2 emission rates for electricity production, based on Sand et al. (1997).
Additional emission benefits are also associated with this option as a result of avoided (R-404A) refrigerant losses at equipment disposal. Assuming an emission rate of 56 percent at disposal, a further 1.27 kg of refrigerant emissions could be avoided per ton of cooling capacity, equal to a
one-time emission reduction of 1.13 TCE per ton of cooling capacity.

Enhanced HFC-134a Systems in MVACs

Various options exist to reduce emissions of HFC-134a in MVACs by reducing charge size, leak rates, and/or system efficiency (i.e., reducing system power consumption). Specifically, reducing the volume of the system components, such as the condenser and refri gerant lines, can reduce charge size. Similarly, leak rates can be lowered and system efficiency improved by using better system components, such as improved system sealing, lower permeation hoses, im proved fittings, and higher evaporator temperatures (Lundberg, 2002; Xu and Amin, 2000). Additional savi ngs of indirect emissions can be obtained by improving system efficiency, for example through the use of oil separators and externally controlled swashplate compressors.

Based on the latest science and industry estimates ava ilable at publication, enhanced HFC-134a systems can reduce baseline direct emissions by 50 percent (SAE , 2003a). This technology is expected to become commercial between 2004 and 2006 (SAE , 2003a). This analysis assumes a project lifetime (i.e., MVAC lifetime) of 12 years. Regional technical applicabilities and the reduction efficiency are presented in
Table 1-11.

Table 1-11: Summary of Assumptions for Enhanced HFC-134a Systems for New MVACs Technical Applicability b Country/Region Applicable EndUse Sector(s) Reduction Efficiency a 2010 2020 U.S. & Japan 28.5% 19.5%

Other Annex I 40.4% 15.9%

Latin America & Caribbean 16.2% 7.8%
Other Non-Annex I, Russia, CEITs MVACs 50%

10.7% 13.6%

a Reduction Efficiency applies to all regions, and represents the reduction in direct emissions (compared to conventional HFC-13 4a systems) as a result of reduced leakage.

b Technical Applicability is shown as a percent of total refrigeration/air-conditioning sector emissions, and equals the percent of total refrigeration/air-conditioning sector emissions that are assumed to come from MVACs.

Acceptance of this substitute would likely vary by region, based on consumer and industry attitudes, economic variables, and availability of competing options. Enhanced HFC-134a systems are expected to become commercially available several years before other alternatives (e.g., carbon dioxide, HFC-152a). Therefore, this analysis assumes that initially enhan ced HFC-134a systems will most deeply penetrate the markets of Europe, Australia and Japan, where regula tions, policy, and/or voluntary initiatives are movingAnalysis of Costs to Abate International ODS Substitute Emissions

-27- fastest to reduce HFC use and emissions. Beyond 2010, however, Europe 15 and Japan are expected to move away from HFC-134a use in MVACs, so this option is assumed to gain the greatest market penetration in other developed countries, such as the United States and Canada, where industry is resistant to switching from using HFC-134a. In developing count ries, capital cost is expected to prevent this option from penetrating the market at all. The cost analysis for this option does not include any costs associated with retrofitting existing HFC-134a systems. Therefore, this option is assumed to penetrate only new MVACs produced after 2004. Assumptions on maximum market penetration for each region and year are presented in Table 1-16 and Table 1-17.

Cost and Emission Reduction Analysis

The following bullets describe the cost and emission i nputs used to derive the final $/TCE for enhanced HFC-134a systems for MVACs, the results of which are presented in Section 1.4:

• One-Time Costs. While enhanced HFC-134a MVACs are yet to be fully developed and commercialized, the additional capital cost of th is option is assumed to be 40 Euros, or $45 USD, 16 per system, based on the latest available industry estimates (SAE, 2003a).

• Annual Costs. No annual costs are associated with this option.

• Cost Savings. Enhanced HFC-134a systems will potentia lly reduce energy consumption by as much as 25 to 30 percent (SAE, 2003a). For calcu lation purposes, 27.5 percent is assumed. In the United States, this gain in energy efficiency is estimated to translate into a savings of 10.2 gallons of gasoline per vehicle per year (R ugh and Hovland, 2003). Assuming an average gasoline price of $1.51/gallon (EIA, 2001), this r esults in an annual cost savings of approximately $15.46 per year in the United States. 17 For all other countries, this annual cost savings is adjusted by the estimated amount of gasoline saved per vehicle per year 18 and by average regional costs of unleaded gasoline in 2000. 19 Additional savings due to less maintenance are not analyzed or
included here.

In addition, small cost savings are also associ ated with saved HFC-134a refrigerant, assumed to cost $7.94/kg (DuPont Customer Service, 2004). On an annual basis, these savings are estimated

15 The proposed EC Regulation on fluorinated gases, presented by the Commission on August 11, 2003, prohibits the use of fluorinated gases with a GWP higher than 150 in new MVACs placed on the market beginning in 2009, with the exception of manufacturers that successfully apply for a quota allocation (EC, 2003b). It is currently undergoing review and revision.

16 This cost conversion is based on an exchange rate of $112.5/€100 (Universal Currency Converter Web site, 2003).

17 Average gasoline price is based on the reported average retail price of regular unleaded gasoline in 2000 in the United States (EIA, 2001).

18 The estimated quantity of gasoline saved per vehicle per year varies by the percent of fuel consumed by MVACs (as a percent of total fuel consumption), which in turn varies by MVAC usage. Based on available data, the estimated annual savings of gasoline per vehicle per year associated with a 27.5-percent increase in MVAC efficiency is 2.3 gallons in Europe and 2.0 gallons in Japan (Rugh and Hovland, 2003). For the purpose of this report, the MVAC efficiency value for Europe wa s used as a proxy for the remaining countries.

19 EIA (2001) provides average 2000 prices of regular un leaded gasoline for select countries, which are used as proxies for adjusting the annual cost savings for non-U.S. countries by region. Specifically, the average price in Germany ($3.45/gallon) is used as a proxy for all Europe an countries; the average price in Australia and Canada ($1.90/gallon) is used as a proxy for all other developed countries except Japan; and the average price in Mexico and Taiwan ($2.09/gallon) is used as a proxy for all devel oping countries. The average gasoline price for Japan is $3.74/gallon.Analysis of Costs to Abate International ODS Substitute Emissions

-28- to total approximately $0.35 per MVAC— assuming that conventional HFC-134a MVACs contain an average charge of 0.8 kg, that they em it 10.9 percent of this charge each year, and that 50 percent of these emissions could be avoided through this option.

• Emission Reductions

. Under the enhanced HFC-134a system described above, the annual emission of approximately 0.04 kg (i.e., 0.8 kg charge multiplied by the emission rate of 10.9%/year and the reduction efficiency of 50%) of HFC-134a refrigerant could be avoided from reduced leakage, resulting in the annual reducti on of 0.015 TCE per MVAC. Furthermore, based on U.S. emission factors for motor gasoline (U.S. EPA, 2003), indirect emission benefits associated with a 27.5-percent system efficiency improvement could lead to the annual reduction of an additional 0.025 TCE per MVAC in the United St ates. Overall, this option could, therefore, reduce 0.040 TCE per MVAC each year in the United States. For all non-U.S. countries, the
annual indirect emission benefit estimated for th e United States (0.025 TCE) was adjusted by the estimated amount of gasoline saved per vehicle per year (Rugh and Hovland, 2003) and by the global average emission factor for motor gasoline (IPCC, 1996).

HFC-152a Refrigerant in MVACs

Replacing HFC-134a refrigerant in MVACs with HFC- 152a represents a significant opportunity to reduce HFC emissions, since the GWP of HFC-152a is 140, 89 percent less than that of HFC-134a, whose GWP is 1300. HFC-152a is a flammable refrigerant but is less flammable than hydrocarbons. HFC-152a can be used in both direct expansion (DX) and secondary loop MVAC systems. Because there is still great uncertainty associated with the futu re costs of HFC-152a secondary loop systems for MVACs, this cost analysis only considers the DX option. Likewise, becau se there is still great uncertainty associated with future costs of “improved” HFC-152a MVACs—whic h will use improved system components to further reduce refrigerant leak rates, as well as externally -controlled variable displacement compressors and refrigerant system controls to further increase syst em efficiency—only the conventional DX systems are considered in this costs analysis.

In addition to direct emission reductions associated with a lower GWP, HFC-152a DX systems in MVACs also reduce indirect emissions by improving system efficiency by about 10 percent (SAE, 2003a). This analysis assumes a project lifetime (i.e., MVAC lifetime) of 12 years. Regional technical applicabilities and the reduction effici ency are presented in Table 1-12.

Table 1-12: Summary of Assumptions for HFC-152a DX Systems in New MVACs Technical Applicability b Country/Region Applicable EndUse Sector(s) Reduction Efficiency a 2010 2020 U.S. & Japan 28.5% 19.5%

Other Annex I 40.4% 15.9%

Latin America & Caribbean 16.2% 7.8%
Other Non-Annex I, Russia, CEITs MVACs 89%

10.7% 13.6%

a Reduction Efficiency applies to all regions, and represents the reduction in direct emissions (compared to conventional HFC-13 4a systems)
as a result of lower GWP.

b Technical Applicability is shown as a percent of total refrigeration/air-conditioning sector emissions, and equals the percent of total refrigeration/air-conditioning sector emissions that are assumed to come from MVACs.

The use of HFC-152a DX systems in MVACs would not require any significant changes to existing HFC134a system components apart from a safety mitigation sy stem (e.g., a refrigerant detector and a valve to isolate the remaining charge from the passenger comp artment), thereby rendering this option easy to introduce into the market. Furthermore, compared to baseline HFC-134a systems, HFC-152a systems areAnalysis of Costs to Abate International ODS Substitute Emissions

-29- expected to be more efficient and may operate at reduced refrigerant charges and leakage rates. 20 However, because HFC-152a is a slightly flammable gas, safety systems are needed. Thus, personnel training would be needed to enable the safe and effec tive recovery and recycling of refrigerant at service and disposal, and additional safety systems to mini mize the potential for large leaks into the passenger compartment may be required. New fire-safe service equipment for refrigerant recovery/charging and leak detection may also be required.

While the MVAC industry has demonstrated the use of HFC-152a in prototype DX (and secondary loop) MVAC systems, the technology is still in the resear ch and development phase. HFC-152a systems are expected to become commercially available betwee n 2006 and 2008 (SAE, 2003a). Once available, it is assumed that initially HFC-152a systems will have the greatest market share in Europe, Australia and Japan, where policies and regulations are being deve loped that will aim aggressively at reducing HFC134a emissions from MVACs. Once the technical a nd economic barriers associated with carbon dioxide systems are resolved and such sy stems become more widely used, it is expected that HFC-152a popularity will then decline in the European market and later in other nations like Japan and Australia. In comparison, because other developed countries (e.g., th e United States and Canada) are less open to using non-HFC alternatives, this option is expected to gain market share slowly in those regions. In addition, because HFC-152a has the lowest capital cost of all MVAC options considered in this analysis, it is expected to be the primary alternative for MVAC markets in developing countries in later years. Retrofitting HFC-134a systems to HFC-152a systems is not considered technically or economically feasible because it is assumed that additional safety systems to reduce potential passenger exposure must be incorporated into the system. Thus, costs associat ed with retrofit were not assessed, and this option is assumed to penetrate only new (post-2004) MVACs. Assumptions on maximum market penetration for each region and year are presented in Table 1-16 and Table 1-17.

Cost and Emission Reduction Analysis

The following bullets describe the cost and emission inputs used to derive the final $/TCE for HFC-152a systems for MVACs, the results of which are presented in Section 1.4:

• One-Time Costs. While research and development is s till ongoing on HFC-152a systems, based on the latest available industry estimates, the capital cost of this option is assumed to be 20 to 25 Euros per system more than a standard HFC-134a system (SAE, 2003a). For calculation purposes, 22.50 Euros, or $25.31 USD, 21 is used.

• Annual Costs. No annual costs are associated with this option.

• Cost Savings. Based on industry consensus, HFC-152a systems are estimated to reduce energy consumption by 10 percent (SAE, 2003a), although th ese gains may not be realized in all weather conditions (Hill and Atkinson, 2003). This gain in energy efficiency is estimated to result in a savings of approximately 3.9 gallons of gasoline per vehicle per year in the United States, which translates into an annual cost savings of $5.92, based on average U.S. prices of regular unleaded gasoline in 2000 (Rugh and Hovland, 2003; EIA, 2001). For all non-U.S. countries, this cost savings is adjusted by the estimated amount of gasoline saved per vehicle per year 22 and by the average regional costs of unleaded gasoline in 2000. 23

20 Because these systems are still under development, this co st analysis does not consid er the possible reduction in charge and leakage rates, although efficiency improvement predictions based on SAE (2003a) are included.

21 This cost conversion is based on an exchange rate of $112.5/€100 (Universal Currency Converter Web site, 2003).

22 It assumed that a 10 percent increase in MVAC efficiency results in the annual savings of 0.8 gallons of gasolineAnalysis of Costs to Abate International ODS Substitute Emissions

-30- Because this analysis assumes that HFC-152a w ould be the same price as HFC-134a, and because HFC-152a systems are assumed to leak at the same rate as conventional HFC-134a, (although the associated emissions are less damaging to the environment due to the lower GWP), no cost savings are associated with saved refrigerant.

• Emission Reductions

. Under the HFC-152a system described above, the annual emission of approximately 0.09 kg of HFC-134a refrigerant could be avoided in place of annual emissions of 0.09 kg of HFC-152a—which results in the net annual reduction of 0.028 TCE per MVAC. In addition, based on U.S. emission factors for mo tor gasoline (U.S. EPA, 2003), indirect emission benefits associated with a 10-percent system effi ciency improvement could lead to the reduction of an annual additional 0.009 TCE per MVAC in th e United States. Overall, this option could, therefore, reduce approximately 0.037 TCE per MVAC each year in the United States. For all non-U.S. countries, the annual indirect emission benefit estimated for the United States (0.009 TCE) was adjusted by the estimated amount of gasoline saved per vehicle per year (Rugh and Hovland, 2003) and by the global average emission factor for motor gasoline (IPCC, 1996).Emission benefits are also achieved by this option at MVAC disposal, as the emission of HFC134a could be substituted by emission of lowe r-GWP HFC-152a. Assuming that on average 42.5percent of the original MVAC charge is lost at disposal, the one-time loss of 0.34 kg of HFC134a refrigerant could be replaced by HFC-152a, resulting in the net reduction of approximately 0.11 TCE per MVAC.

Carbon Dioxide in MVACs

Systems using carbon dioxide as the refrigerant in M VACs represent a potential opportunity for emission reduction. This technology uses a transcritical va por cycle which differs from conventional MVAC systems and requires innovative design and engineer ing. The arrangement of components in carbon dioxide systems is generall y consistent with conventi onal systems; however, a suction line heat exchanger
is added and a low side accumulator is used (in place of a high side re ceiver, as used in most conventional HFC-134a systems). In addition, the individual syst em components are designed to reflect the extremely high pressure levels of supercritical carbon dioxide (about 2,000 psig).

Because carbon dioxide has a GWP of 1, it would virtually eliminate the climate impacts of direct refrigerant emissions from MVACs. Carbon dioxide systems perform most efficiently in areas, like northern Europe, that require air conditioners for c ooling and other purposes, but generally have mild ambient temperatures. 24 In addition, heat pump technology for vehicles is under development (VDA, 2003), which may allow CO 2 systems to be used for supplemental heating of the passenger compartment (SAE, 2003a). This may be an important function in cars with very efficient engines where minimal waste heat is available to warm the passenger compartment.

While CO 2 has the advantage of being non-flammable, its system operating pressure is five to 10 times that of HFC-134a; therefore, appropriate safety feat ures and new system/component designs are required before this option can be brought to market. In additi on, an internal heat exchanger, which would further cool the high-temperature CO 2 from the gas cooler and heat the low-temperature CO 2 from the accumulator, would be needed to increase cooling capac ity and energy efficiency to acceptable levels.

in Europe and 0.7 gallons of gasoline in Japan (Rugh and Hovland, 2003). For the purpose of this report, the MVAC efficiency value for Europe was used as a proxy for the remaining countries.

23 Annual cost savings are adjusted by average gasoline prices as explained in footnote 19.

24 Compared to other refrigerant technologies, prototype carbon dioxide MVAC system s are not as efficient in warmer climate conditions. The MVAC industry is actively pursuing research and development activities to improve system efficiency in warmer weather conditions (SAE, 2003b).Analysis of Costs to Abate International ODS Substitute Emissions

-31- Also, in the event of a large leak, passengers coul d be exposed to potentiall y dangerous levels of CO 2 ; therefore, it is assumed that safety systems desi gned to minimize passenger exposure would be incorporated into the system design.

Several engineering constraints must still be overco me, including those associated with flexible lines, increased system weight, and system leakage/leak de tection methods. In addition, because these systems will be designed and built differently than curre nt MVACs, and because the high pressure presents additional risks, technicians will need to be traine d on how to service and maintain these new systems safely and correctly. New service equipment for refri gerant charging and leak detection may also be required. Moreover, because of the high pressure of these systems, MVAC servicing and maintenance would need to be performed by skilled technicians, in order to prevent safety hazards and maintain system performance.

The efficiency gains associated with CO 2 systems (between 20 and 25 percent [SAE, 2003a]) are considered in this cost analysis, using 22.5 per cent for calculation purposes. While efforts are ongoing to develop “improved” CO 2 systems for MVACs—which experts predict would exceed this 20 to 25 percent energy efficiency gain—much uncertainty remain s regarding the investment costs required to manufacture these systems. Therefore, these “improved” CO 2 systems are not considered further in this analysis. This analysis assumes a project lifetime (i.e., MVAC lifetime) of 12 years. Regional technical applicabilities and the reduction efficiency for the CO 2 option considered are presented in Table 1-13.

Table 1-13: Summary of Assumptions for CO 2 Systems in New MVACs Technical Applicability b Country/Region Applicable EndUse Sector(s) Reduction Efficiency a 2010 2020 U.S. & Japan 28.5% 19.5%

Other Annex I 40.4% 15.9%

Latin America & Caribbean 16.2% 7.8%
Other Non-Annex I, Russia, CEITs MVACs 100%

10.7% 13.6%

a Reduction Efficiency applies to all regions, and represents the reduction in direct emissions (compared to conventional HFC-13 4a systems).

b Technical Applicability is shown as a percent of total refrigeration/air-conditioning sector emissions and equals the percent o f total refrigeration/air-conditioning sector emissions that are assumed to come from MVACs.

Carbon dioxide systems may be available on the market in the next four to six years (SAE, 2003a). Because European and Japanese manufacturers are most aggressively pursuing CO 2 , this option is expected to eventually (by 2020) become the dominant market player in these world markets. In other developed countries such as the U.S. and Canada, indu stry is not aggressively developing this technology and it is assumed that this option will not be widely a dopted in these markets in the near future. Finally, because of the high capital costs associated with this op tion (see details below), it is also not expected to be adopted in developing countries until later years, assuming a projected global market shift to non-GWP alternatives. The project lifetime is assumed to be 12 years, and assumptions on maximum market penetration for each region and year are presented in Table 1-16 and Table 1-17. Retrofitting HFC-134a systems to carbon dioxide is not considered techni cally or economically feasible because of the high operating pressures and because it is assumed that add itional safety systems to reduce potential passenger exposure must be incorporated into the systems. Th us, costs to retrofit were not assessed, and this option is assumed to penetrate only new (post-2004) MVACs.

Cost and Emission Reduction Analysis

The following bullets describe the cost and emission inputs used to derive the final $/TCE for CO 2 systems for MVACs, the results of which are presented in Section 1.4:Analysis of Costs to Abate International ODS Substitute Emissions

-32- • One-Time Costs. Based on the latest available industry est imates, the capital cost of this option is assumed to be 80 to 120 Euros on a per system basis (SAE, 2003a). For calculation purposes, 100 Euros, or $112.50 USD, 25 was used.

• Annual Costs. No annual costs are associated with this option.

• Cost Savings. Based on industry co nsensus, it is estimat ed that enhanced CO 2 systems may reduce energy consumption, compared to a baseline HFC-134a system, by 20 to 25 percent (an average of 22.5 percent is used for calcul ation purposes), although these gains may not be realized at all ambient temperatures (SAE, 2003a). This gain in energy efficiency results in the savings of approximately 8.4 gallons of gasoline per vehicle per year in the United States, which translates roughly into an annual cost savings of $12.67 (Rugh and Hovland, 2003; EIA, 2001). For all non-U.S. countries, this cost savings w as adjusted by the estimated amount of gasoline saved per vehicle per year 26 and by average cost of unleaded gasoline in 2000 (Rugh and Hovland, 2003; EIA, 2001). 27

In addition, small cost savings are associated with saved (HFC-134a) refrigerant, assumed to cost $7.94/kg (DuPont Customer Service, 2004). On an annual basis, these savings are estimated to total $0.69 per MVAC—assuming that conven tional HFC-134a MVACs contain an average charge of 0.8 kg, that they emit 10.9 percent of this charge each year, and that 100 percent of these emissions could be avoided through th is option. The additional cost of CO 2 refrigerant is
assumed to be small and is not included in the analysis.

• Emission Reductions

. Under the CO 2 system described above, the annual emission of approximately 0.09 kg of HFC-134a refrigerant could be avoided, resulting in the reduction of 0.031 TCE per MVAC. In addition, based on U.S. emission factors for motor gasoline (U.S. EPA, 2003), indirect emission benefits associated with a 22.5-percent system efficiency improvement could lead to the reduction of an additional 0.020 TCE per MVAC in the United States. Overall, this option could, therefor e, reduce approximately 0.051 TCE per MVAC each year in the United States. For all non-U.S. countries, the annual indirect emission benefit estimated for the United States (0.020 TCE) was adjusted by the estimated amount of gasoline saved per vehicle per year (Rugh and Hovland, 2003) and by the global average emission factor for motor gasoline (IPCC, 1996). Furthermore, a one-time disposal loss of 0.34 kg of HFC-134a refrigerant can also be avoided (assuming a dispo sal loss rate of 42.5 percent), which would result in a further one-time reduction of 0.12 TCE per MVAC.

Oil-Free Compressors

Oil-free compressors are available for chillers, industr ial process applications, and other applications where compressors are used. The elimination of oil in refrigeration/air-conditioning compressors has been achieved through various innovative designs, in cluding the incorporation of magnetic or hybrid ceramic bearings (SKF, 2003; Smithart, 2003). In some systems, oil may d ecrease heat transfer and reduce operating efficiency; therefore, removing oil ma y increase the ability to sust ain system efficiency over the life of the equipment—thereby lowering indirect emissions of CO 2 associated with producing electricity. Eliminating the use of oil in compre ssors can reduce the number of equipment components (e.g., oil separators and sealing, fittings and connec tions), allowing equipment to be made tighter, and resulting in lower leak rates. In addition, oil-free compressors remove the need for oil changes and the

25 This cost conversion is based on an exchange rate of $112.5/€100 (Universal Currency Converter Web site, 2003).

26 A 22.5-percent increase in MVAC efficiency is assumed to result in the annual savings of 1.9 gallons of gasoline in Europe and 1.7 gallons of gasoline in Japan (Rugh and Hovland, 2003). For the purpose of this report, the MVAC efficiency value for Europe was used as a proxy for the remaining countries.

27 Annual cost savings are adjusted by average gasoline prices as explained in footnote 19.Analysis of Costs to Abate International ODS Substitute Emissions

-33- associated refrigerant emissions that may be experi enced either through the service practices used or from refrigerant dissolved in the oil. This potential em ission reduction may be offset however by an increased frequency of compressor/bearing inspection or repl acement (Digmanese, 2004), although an increasing history of operation may prove that unnecessary. Th is option was not included in the cost analysis, however, as a result of limited data available on th is new technology and its applicability in future
markets.

Geothermal Cooling Systems

In some locations, geothermal cooling systems fo r residential and commercial spaces are popular and economically sound as an alternative to conventiona l air-conditioning systems. Geothermal technology transfers heat between the system and the earth and can provide both space heating and cooling. Though installation costs are typically 30 to 50 percent higher than conventional systems, annual costs are reduced by 20 to 40 percent, due in large part to increased energy efficiency. Economic paybacks can accrue in as little as three to five years. Geothermal systems ma y save homeowners 20 to 50 percent in cooling costs (Geoexchange, 2000; Rawlings, 2000). This technology has also been u sed in ice skating rinks. Because of a lack of cost and market penetration data, this t echnology is not considered further in this analysis.

Desiccant Cooling Systems

Desiccant cooling is produced by removing moistu re from an air stream using a desiccant, and then separately cooling the dry air. The desiccant is therma lly regenerated, typically by burning natural gas or alternatively, by capturing excess h eat. Desiccant cooling may replace the latent cooling done by some end-uses, such as unitary systems. Integrated desi ccant cooling systems that combine a desiccant system with a vapor compression or other cooling system ha ve been successfully installed in some commercial buildings (Fisher et al., 1994).

However, current designs are used primarily in nich e markets that require precisely-controlled and/or low humidity, such as hospital operating rooms and certain industrial processes. Fo r desiccant-based systems to be considered widely feasible options in th e commercial air-conditioning market, improvements in efficiency, cost, size, reliability, and life e xpectancy must be made (Sand et al., 1997).

Desiccant systems have also been tried in MVAC systems, but found not to be technically or economically feasible. These systems require an intermittent source of heat; however, because new automobiles produce very little waste heat, not enoug h heat is produced for a desiccant system to function. Desiccant systems may therefore only be f easible where there is a large heat source, as in a large truck or bus (Environment Ca nada, 1998). Furthermore, in order for desiccant air-conditioners to become viable options for MVACs, the varying heat source must be controlled during normal driving conditions, when vehicle speed is continually changing. Current prototypes are large and heavy, and the systems have not been shown to be cost-effective or durable enough to justify the initial investment (U.S. EPA, 2001a).

Because of the technical barriers and insufficient cost information associated with the feasibility of this option in potentially applicable end-uses, this opt ion was not explored further in this analysis.

Absorption Systems

Absorption systems refrigerate/cool through the use of two fluids and some quantity of heat input, rather than electrical input as in the more familiar vapor compression cycle. Specifically, absorption systems use a secondary fluid or absorbent to circulate the refrigerant (Rafferty, 2003). These systems can beAnalysis of Costs to Abate International ODS Substitute Emissions

-34- used in residential refrigeration and chiller applicati ons and, potentially, heat pumps in residential and light commercial applications, as described below.

Refrigeration Systems : In the late 1990s, more than one million of an estimated 62 million refrigerators sold annually were thermally-activated ammonia/ water absorption systems (Sand et al., 1997). The refrigerants used for absorption re frigeration have negligible GWPs . Absorption refrigeration is commonly used in hotel rooms and for recreational ve hicles because it operates quietly and has the ability to use bottled gas as an energy source. Absorption refrigerators are limited in size because of design constraints. The thermal coefficient of performance (COP) of these refrigerators can be increased by as much as 50 percent (from a COP of 0.2 to 0.3) thro ugh design improvements w ithout degrading cooling capacity (Sand et al., 1997). However, the low efficien cy of absorption equipment means that the indirect emissions must be carefully analyzed. Inherent design limitations make it unlikely that absorption refrigeration will become a significant replacement for vapor compression refrigerators. However, absorption refrigeration has great capacity and operating attributes that permit it to fill niche markets (Sand et al., 1997).

Chillers: Gas-fired (as opposed to electrically-powered) ab sorption water chillers ar e sold in the United States and are common in Japan. These systems are used mostly where there is a relatively short cooling season, where electricity costs (especially demand charges) are high, and/or where fairly high-grade waste heat is available. Although abso rption chillers are far less efficient th an competitive systems if waste heat is not available, the technology is feasible and, under some economic circumstances, compares favorably with vapor compression chillers using fluorocarbon refrige rants. Market success will be determined by factors such as the relative costs of natural gas and el ectricity, peak load charg es, and purchase costs. In addition, absorption chillers currently have higher cap ital costs than vapor compression equipment, such that significant operating cost savings would be necessary to make their purchase economically competitive.

Heat Pumps : Research and development efforts are attempting to create absorption heat pumps that would be used for heating and cooling in residential and li ght commercial applications. Several years ago, in Europe and the United States, generator absorber h eat exchange (GAX) ammonia-water absorption heat pumps were being deve loped, while field test units had been bu ilt in Japan. Absorption heat pumps could be used to reduce global warming impacts in areas where heating load dominates, although they would have the opposite effect in areas where cooling dominates (Sand et al., 1997).

Because these options are either still under developm ent or are currently optimal primarily in niche markets, sufficient information was not available to include their costs and reduction potential in this analysis.



### 1.3.2 Calculation of Indir ect Emissions and Costs for Options Applicable to Stationary Equipment

For three of the technology options assessed for stationary equipment 28 —distributed systems, HFC secondary loop systems, and ammonia secondary loop systems—a TEWI analysis was conducted to
account for “indirect” emissions and costs associated with changes in energy consumption relative to centralized direct expansion systems, the conve ntional HFC technology assumed to be replaced.

28 Three other technology options analyzed quantitatively in this report apply only to MVACs. For those options, the net costs and emissions associated with changes in energy efficiency (i.e., reduced fuel consumption) are considered in the analysis, as explained under each of the option descriptions.Analysis of Costs to Abate International ODS Substitute Emissions

-35- Calculations of indirect emissions and costs ar e based on data from ADL (2002) and EIA (2000), as presented in Table 1-14.

Based on Table 1-14, net energy consumption and costs in the United States were f actored into the annual costs/cost savings of each of the three technology options. For all non-U.S. countries, net indirect emissions were adjusted based on count ry-specific information on average CO 2 emission rates (kg/kWh) associated with national electricity generation (Sand et al., 1997). Likewise, for all non-U.S. countries, annual costs or cost savings associated with changes in energy consump tion were also adjusted based on country-specific electricity prices for industry (average 1994-1999) (EIA, 2000).

Table 1-14: Net Annual Emissions and Energy Costs of Replacement Options in the United States in a 600,000 Square Foot Supermarket a,b

Centralized Direct Expansion

System (Base) Distributed System Ammonia Secondary Loop System HFC Secondary Loop System Charge Size (kg) c 1,633 408 180 180 HFC Leak Rate (% of charge/yr) c 15% 4% 0% 2% Direct Emissions (kg/yr) 245 16 0 4 Change in Direct Emissions (k g/yr) N/A (229) (245) (241) Change in Direct Emissions (kg/yr)

per ton of cooling capacity d N/A (0.32) (0.34) (0.34) Change in Direct Emissions (TCE/yr) e N/A (204) (218) (214) Energy Consumption (kWh/yr) c 1,200,000 1,100,000 1,400,000 f 1,400,000 f Indirect Emissions (TCE/yr) g 198 182 231 231 Change in Indirect Emissions (TCE/yr) N/A (17) 33 33 Change in Indirect Emissions (TCE/yr)

per ton of cooling capacity d N/A (0.02) 0.05 0.05 Change in Net Emissions (TCE /yr) N/A (221) (185) (181) Net Electricity Cost ($/yr) h N/A ($4,000) $8,000 $8,000 Annual Change in Energy

Consumption (kWh/yr) per ton of cooling capacity i N/A (139) 278 278 Estimated Net Electricity Cost

($/ton of cooling capacity) j N/A ($5.72) $11.43 $11.43
Note: Totals may not sum due to independent rounding. N/A = not applicable.

a 600,000-sq. ft. is the typical size of a supermarket in the United States (ADL, 2002).

b To apply this U.S. analysis to the rest of the world, adjustments by relative energy emission factors (kg CO 2 /kWh) and electricity costs for individual countries, based on Sand et al. (1997) and EIA (2000), were made.

c Based on ADL (2000).

d Assumes that conventional dire ct expansion systems require 5 pounds (or 2.27 kg) of refrigerant per ton of cooling capacity (S mithart, 2000). For a 600,000 sq. ft. store using 3,600 lb. refrigerant (ADL, 2002), this translates to 720 tons of cooling capacity.

e Assumes the refrigerant is R-404A (ADL, 2002).

f Recent technological adv ances on secondary loop refrigeration systems for supermarkets sugg est that, with the use of improved technological features and desig n/manufacturing/contractor ex perience, these systems can lead to signif icant reductions in energy consumption (Walker, 2000; Baxter, 2003; Kazachki, 2003); however, these reductions are not assumed in this analysis.

g Assumes a national average emissions factor of 0.606 kg CO 2 /kWh (EIA, 2004).

h Assumes average energy costs for U.S. between 1994-1999 (of approximately $0.04/kWh) based on EIA (2000).

i Calculated by dividing the ch ange in energy cons umption (kWh/yr) by the c harge size of direct expansion systems(kg) and multip lying by the quantity of refrigerant needed on a per to n of cooling capacity basis for conventio nal direct expansion systems (see footnote e ). E.g., for secondary loop systems: (1,400,000 – 1,200,000) kWh/yr ÷ 1,633 kg charge × 2.27 kg/ton of cooling capacity = 278 kWh/ton of coo ling capacity.Analysis of Costs to Abate International ODS Substitute Emissions

-36- j Calculated by multiplying annual change in energy consumption per ton of cooling capacity by average energy costs (assumed to be approximately $0.04/kWh, as explained in footnote h).

Thus, for HFC and ammonia secondary loop system s, which are associated with decreased energy efficiency relative to centralized HFC direct expa nsion systems and, therefore, increased indirect emissions, the net increase in indirect emissions w as subtracted from the estimated savings in direct emissions, and annual energy costs were accounted fo r in the analysis. Conversely, for distributed systems, which are associated with increased energy efficiency comp ared to centralized HFC direct expansion systems, the net savings in indirect emissi ons were added to the savings of direct emissions, and annual cost savings associated with lower elec tricity costs were accounted for in the analysis. Therefore, overall, the calculation of indirect emis sions and costs resulted in slightly lower emission benefits and higher annual costs for HFC and ammonia secondary loop systems, and in a slightly greater emission benefit and lower annual costs for direct expansion systems.



### 1.3.3 Summary of Technical Applicability and Market Penetration of Abatement Options

Table 1-15 summarizes the percent of total refrige ration/air-conditioning sector emissions that may be technically abated by each of the options explored in this analysis, based on the percent of sector emissions from each end-use (which varies by region) , as provided in Table 1-3. Market penetration values for each abatement option were developed for each region when possible, to best reflect qualitative information available on region-specific realities and possible future action. The commercial refrigeration and MVAC technology op tions explored in this chapter are assumed to penetrate only new (not existing) equipment, where “new” equipment is defined as equipment manufactured in 2005 or later. Table 1-16 presents the assumed maximum market pene tration for the technology options into equipment manufactured in 2005, 2010, 2015 and 2020. Table 1-17 presents the final maximum penetration into the installed base of equipment, taking into account the percent of each market that is new (i.e., manufactured in 2005 or beyond) in all preceding years. Values from Table 1-17 are multiplied by technical applicabilities (Table 1-15) and the reduction efficien cy to generate the percent reduction off baseline emissions for each option, as presented in Table 1-18. The text box provided in Section 1.4 provides further explanation on how the results (percent reduction off baseline emissions) are calculated.Analysis of Costs to Abate International ODS Substitute Emissions-37-Table 1-15: Summary of Technical Applicability of Abatement Options by Region, PercentaU.S. & Japan Europe, Australia, NewZealand, & All OtherDeveloped CountriesLatin America & Caribbean Russia, CEITs, & All OtherDeveloping CountriesAbatement Option 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020Refrigerant Recoveryfrom SmallEquipment 26.3 24.0 23.7 24.1 30.7 28.3 23.0 23.0 19.4 19.5 19.6 20.3 16.0 17.5 19.7 22.2Leak Repair for LargeEquipment23.7 26.0 26.3 25.9 19.3 21.7 27.0 27.0 30.6 30.5 30.4 29.7 34.0 32.5 30.3 27.8Ammonia SecondaryLoop 39.7 43.6 44.1 43.1 32.3 36.3 45.4 45.1 51.2 51.0 51.0 49.4 57.0 54.4 50.9 46.3Distributed System 39.7 43.6 44.1 43.1 32.3 36.3 45.4 45.1 51.2 51.0 51.0 49.4 57.0 54.4 50.9 46.3HFC Secondary LoopSystem 39.7 43.6 44.1 43.1 32.3 36.3 45.4 45.1 51.2 51.0 51.0 49.4 57.0 54.4 50.9 46.3Enhanced HFC-134a inMVACs 37.0 28.5 22.7 19.5 48.7 40.4 20.5 15.9 18.7 16.2 10.7 7.8 9.5 10.7 10.9 13.6HFC-152a in MVACs 37.0 28.5 22.7 19.5 48.7 40.4 20.5 15.9 18.7 16.2 10.7 7.8 9.5 10.7 10.9 13.6CO2in MVACs 37.0 28.5 22.7 19.5 48.7 40.4 20.5 15.9 18.7 16.2 10.7 7.8 9.5 10.7 10.9 13.6aExpressed as a percent of total refrigeration and air-conditioning emissions.Analysis of Costs to Abate International ODS Substitute Emissions-38-Table 1-16: Incremental Maximum Market Penetration of Technology Options intoNew Equipment by Region, Expressed as a Percent of Emissionsfrom New Refrigeration/Air-Conditioning EquipmentaU.S. Europe Japan, Australia & NewZealandAll Other DevelopedCountriesLatin America &Caribbean, Russia,CEITs, & All OtherDeveloping CountriesAbatement Option 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020AmmoniaSecondary Loop3 5 13 20 5 10 13 15 5 10 13 15 5 10 13 15 5 10 10 10Distributed System 8 15 23 30 10 20 30 40 10 20 30 40 10 20 30 40 8 15 20 25HFC SecondaryLoop System 8 15 23 30 5 10 18 25 5 10 18 25 5 10 18 25 8 10 13 10Enhanced HFC134a in MVACs 10 65 75 65 40 20 10 0 40 25 10 0 10 65 75 65 0 0 0 0HFC-152a inMVACs 0 5 15 25 0 25 15 0 0 25 40 25 0 5 15 25 0 20 35 50CO2in MVACs 0 5 10 10 0 30 75 100 0 25 50 75 0 5 10 10 0 0 5 10aExpressed as a percentage of new equipment for the given year. The baseline market penetration of all technology options is assumed to be zero so that only incremental market penetration isanalyzed.Analysis of Costs to Abate International ODS Substitute Emissions-39-Table 1-17: Incremental Maximum Market Penetration of All Abatement Options by Region, Expressedas a Percent of Total Refrigeration/AirConditioning EmissionsaU.S. Europe Japan, Australia & NewZealandAll Other DevelopedCountriesLatin America &Caribbean, Russia, CEITs,& All Other DevelopingCountriesAbatement Option 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020Refrigerant Recoveryfrom SmallEquipmentb5.0 10.0 10.0 15.0 5.0 10.0 10.0 15.0 5.0 10.0 10.0 15.0 5.0 10.0 10.0 15.0 20.0 30.0 40.0 50.0Leak RepairforLarge Equipment3.0 3.0 5.0 5.0 3.0 3.0 5.0 5.0 3.0 3.0 5.0 5.0 3.0 3.0 5.0 5.0 5.0 10.0 12.0 15.0Ammonia SecondaryLoop 0.2 1.4 4.3 9.4 0.3 2.6 6.1 8.8 0.3 2.6 6.1 8.8 0.3 2.6 6.1 8.8 0.3 2.6 5.6 7.0Distributed System 0.5 4.1 9.9 17.9 0.6 5.3 12.9 20.5 0.6 5.3 12.9 20.5 0.6 5.3 12.9 20.5 0.5 4.1 9.4 13.7HFC SecondaryLoop System 0.5 4.1 9.9 17.9 0.3 2.6 7.0 12.0 0.3 2.6 7.0 12.0 0.3 2.6 7.0 12.0 0.5 3.2 6.6 7.9Enhanced HFC-134ain MVACs 0.8 18.8 48.3 68.3 3.3 15.0 20.8 11.2 3.3 16.3 22.9 12.8 0.8 18.8 48.3 68.3 0.0 0.0 0.0 0.0HFC-152a in MVACs 0.0 1.3 5.8 14.1 0.0 6.3 14.2 14.2 0.0 6.3 20.4 30.8 0.0 1.3 5.8 14.1 0.0 5.0 17.1 33.4CO2in MVACs 0.0 1.3 4.6 8.3 0.0 7.5 31.3 65.8 0.0 6.3 22.9 47.5 0.0 1.3 4.6 8.3 0.0 0.0 1.3 4.6aExpressed as a percentage of entire installed base. The baseline market penetration is assumed to be zero, unless otherwise noted.bShown percentage values are incremental relative to the baseline market penetration, which is assumed to be 80 percent in developed countries and 30 percent in developing countries.Analysis of Costs to Abate International ODS Substitute Emissions-40-Table 1-18: Percent Reduction off Baseline Emissions of All Abatement Options by RegionU.S. Europe Japan Australia & NewZealandAll Other DevelopedCountriesLatin America &CaribbeanRussia, CEITs, & AllOther DevelopingCountriesAbatementOption 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020 2005 2010 2015 2020RefrigerantRecovery fromSmallEquipment1.1 2.0 2.0 3.1 1.3 2.4 2.0 2.9 1.1 2.0 2.0 3.1 1.3 2.4 2.0 2.9 1.3 2.4 2.0 2.9 3.3 5.0 6.7 8.6 2.7 4.5 6.7 9.4Leak Repair forLargeEquipment0.7 0.7 1.2 1.2 0.5 0.6 1.3 1.3 0.7 0.7 1.2 1.2 0.5 0.6 1.3 1.3 0.5 0.6 1.3 1.3 1.5 2.9 3.5 4.2 1.6 3.1 3.5 4.0AmmoniaSecondaryLoop 0.1 0.6 1.9 4.0 0.1 1.0 2.8 4.0 0.1 1.2 2.7 3.8 0.1 1.0 2.8 4.0 0.1 1.0 2.8 4.0 0.2 1.4 2.8 3.5 0.2 1.4 2.8 3.2DistributedSystem 0.2 1.6 4.1 7.2 0.2 1.8 5.5 8.6 0.2 2.1 5.3 8.2 0.2 1.8 5.5 8.6 0.2 1.8 5.5 8.6 0.2 1.9 4.4 6.3 0.2 2.1 4.4 5.9HFC SecondaryLoop System 0.2 1.7 4.3 7.6 0.1 0.9 3.1 5.3 0.1 1.1 3.0 5.1 0.1 0.9 3.1 5.3 0.1 0.9 3.1 5.3 0.2 1.6 3.3 3.9 0.3 1.7 3.3 3.6Enhanced HFC134a inMVACs 0.2 2.7 5.5 6.7 0.8 3.0 2.1 0.9 0.6 2.3 2.6 1.2 0.8 3.3 2.3 1.0 0.2 3.8 5.0 5.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0HFC-152a inMVACs 0.0 0.3 1.2 2.4 0.0 2.2 2.6 2.0 0.0 1.6 4.1 5.3 0.0 2.2 3.7 4.4 0.0 0.4 1.1 2.0 0.0 0.7 1.6 2.3 0.0 0.5 1.7 4.0CO2in MVACs 0.0 0.4 1.0 1.6 0.0 3.0 6.4 10.4 0.0 1.8 5.2 9.3 0.0 2.5 4.7 7.5 0.0 0.5 0.9 1.3 0.0 0.0 0.1 0.4 0.0 0.0 0.1 0.6Analysis of Costs to Abate Intern ational ODS Substitute Emissions

-41- 

## 1.4 Results

Emission reduction potential for abatement options va ries by region based on assumed end-use breakouts (provided in Table 1-3) and on qualitative informati on regarding current and future likelihood of market penetration by region. The per cent reduction from the baseline associat ed with each abatement option is calculated by multiplying the technical applicability (from Table 1-15) by both the incremental maximum market penetration (from Table 1-16) and the redu ction efficiency. For more information on how emission reductions are calculated for each option, please see the Text Box below, which presents an illustrative example of the emission reduction methodology.

Table 1-19 through Table 1-21 provide a summary of the potential emission reduction opportunities and
associated annualized costs for the United States, Non-U.S. Annex I a nd Non-Annex I countries in 2020.
The annualized costs to reduce one ton of carbon e quivalent (TCE) are presented for two different discount rate scenarios: 4 percent and 20 percent. Th e tax rate associated with each cost scenario is 0 percent and 40 percent, respectively. The results are ordered by increasing costs per TCE, using the highest cost in the region under the 4 percent discount rate. The emissions reduced by the option and a cumulative total of emissions reduced, in MMTCE a nd percent of the regional refrigeration and airconditioning baseline, are presented.

Table 1-19: United States Emission Reductions in 2020 and Break-Even Costs for Refrigeration and AirConditioning Cost (2000$/TCE)

Discount/Tax Rate

Reduction Option 4%/0% 20%/40% Emission
Reduction of Option (MMTCE) Percent
Reduction from
2020 Baseline Cumulative
Reductions

(MMTCE) Cumulative %
Reduction from
2020 Baseline Enhanced HFC-134a in MVACs ($275.47) ($35.34) 4.51 6.7% 4.51 6.7% HFC-152a in MVACs ($73.65) $55.55 1.66 2.4% 6.17 9.1%

CO 2 in MVACs ($23.44) $422.48 1.09 1.6% 7.26 10.7% Distributed Systems ($12.70) $62.60 4.87 7.2% 12.13 17.9% Leak Repair for Large Equipment ($11.74) ($3.78) 0.83 1.2% 12.96 19.1% Refrigerant Recovery from Small

Equipment $0.49 $0.49 2.09 3.1% 15.05 22.2% HFC Secondary Loop $28.87 $68.66 5.16 7.6% 20.20 29.8% Ammonia Secondary Loop $30.19 $78.79 2.74 4.0% 22.94 33.8%Analysis of Costs to Abate Intern ational ODS Substitute Emissions

-42- Table 1-20 : Non-U.S. Annex I Emission Reductions in 2020 a nd Break-Even Costs for Refrigeration and AirConditioning Break-Even Cost (2000$/TCE) a Discount/Tax Rate

4%/0% 20%/40%

Reduction Option Low High Low High Emission
Reduction of Option (MMTCE) Percent
Reduction
from 2020
Baseline Cumulative
Reductions

(MMTCE) Cumulative
%
Reduction
from 2020
Baseline Leak Repair for Large Equipment ($11.74) ($11. 74) ($3.78) ($3.78) 0.64 1.7% 0.64 1.7% Distributed Systems ($57.61) ($8.08) $15.99 $69.97 3.07 8.0% 3.71 9.7% Refrigerant Recovery from Small

Equipment $0.49 $0.49 $0.49 $0.49 1.52 4.0% 5.24 13.7% Enhanced HFC-134a in MVACs ($161.67) $7.02 $299.69 $468.38 0.51 1.3% 5.74 15.1% HFC-152a in MVACs ($4.59) $30.81 $164.88 $205.42 1.31 3.4% 7.05 18.5% Ammonia Secondary Loop $18.59 $123.84 $62.61 $180.96 1.44 3.8% 8.50 22.3% HFC Secondary Loop $16.97 $125.39 $53.67 $173.22 1.90 5.0% 10.40 27.3%

CO 2 in MVACs $113.91 $180.72 $763.86 $839.80 2.84 7.5% 13.24 34.7%

a Costs vary by country/region based on one-time or annual adjustment factors (e.g., electricity price, fuel price, etc.); there fore, the lowest and highest costs for the region are shown.

Table 1-21: Non Annex I Emission Reductions in 2020 and Break-Even Costs for Refrigeration and AirConditioning Break-Even Cost (2000$/TCE) a
Discount/Tax Rate

4%/0% 20%/40%

Reduction Option Low High Low High Emission
Reduction of Option (MMTCE) Percent
Reduction
from 2020
Baseline Cumulative
Reductions

(MMTCE) Cumulative
%
Reduction
from 2020
Baseline Enhanced HFC-134a in MVACs ($13.12) ($13.12) $448.24 $448.24 - 0.0% - 0.0% Leak Repair for Large Equipment ($11.74) ($11. 74) ($3.78) ($3.78) 2.12 4.0% 2.12 4.0% Distributed Systems ($25.88) ($4.60) $48.87 $70.09 3.17 6.0% 5.29 10.0% Refrigerant Recovery from Small

Equipment $0.49 $0.49 $0.49 $0.49 4.91 9.3% 10.20 19.3%
HFC-152a in MVACs $26.58 $26.58 $200.58 $200.58 1.96 3.7% 12.16 23.0% HFC Secondary Loop $10.53 $59.19 $49.87 $104.49 1.93 3.7% 14.09 26.7% Ammonia Secondary Loop $12.47 $59.61 $60.78 $114.41 1.74 3.3% 15.83 29.9%
CO2 in MVACs $172.75 $172.75 $830.74 $830.74 0.30 0.6% 16.13 30.5%

a Costs vary by country/region based on one-time or annual adjustment factors (e.g., electricity price, fuel price, etc.); there fore, the lowest and highest costs for the region are shown.



## 1.5 Summary

Baseline HFC emissions from refrigeration/AC are exp ected to grow significantly between the years 2005 and 2020 as HFCs become increasingly used throughout the world to replace gases phased out under the Montreal Protocol. The highest percentage emissi ons growth is expected to occur in developing
countries.

This analysis considers the costs and emission re duction potential of eight practice and technology emissions mitigation options: (1) Leak Repair for Large Equipment; (2) Refrigerant Recovery/Recycling from Small Equipment; (3) Distributed System; (4) HFC Secondary Loop; (5) Ammonia Secondary Loop; (6) Enhanced HFC-134a Systems in MVACs; (7) HFC-152a Systems in MVACs; and (8) CO 2 Systems in MVACs. The costs and emission reducti on benefits of each option were compared in each region. Overall, enhanced HFC-134a systems in MVACs represent the most cost-effective option forAnalysis of Costs to Abate Intern ational ODS Substitute Emissions

-43- reducing emissions in all regions at a 4 percent disc ount rate. Distributed systems represent the most promising option for reducing the greatest amount of emissions worldwide, at a negative or low cost. In developing countries, the low-cost option of refrigerant recovery is also promising for significantly reducing emissions.



## 1.6 References

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