The EU Continues to Phase-out Harmful Refrigerants

Environmental regulations have a profound impact on the global commercial refrigeration equipment market. Regulatory changes drive product demand, influence refrigeration equipment pricing and availability, and encourage technological innovation. Because both manufacturers and operators of commercial refrigeration equipment are impacted by the adoption of new rules, environmental regulations are often implemented in phases. Furthermore, many of the leading end-use markets are critical components of a country’s economy – such as food and beverage production – so major disruptions can be very harmful.

Europe has some of the world’s most demanding environmental standards for commercial refrigeration equipment. Regulations occur at both the regional and national level. As concerns about climate change and the impact of refrigeration machinery on the environment during the last decade, a variety of new rules have been put in place. Regulatory activity has picked up in recent years:

• In 2021, the EU implemented new eco-design standards and energy efficiency labelling requirements for refrigerated display cabinets.

• After the success of its predecessors (2006 & 2014), the EU adopted its new F-gas Regulation (EU) 2024/573 in February 2024 as concerns about climate change in the region continued to intensify. The new F-gas Regulation reduces hydrofluorocarbon (HFCs) use; expands the HFC quota system; implements strict rules to prevent HFC emissions; facilitates better monitoring; and caps EU HFC production. It will be implemented in phases and there may be exceptions to minimize the impact on manufacturers and operators.

In a related development, the EU is also working to phase out PFAS and regulations are likely to be adopted in the near term. Fluorinated gasses – which are used widely as refrigerants – are a major source of PFAS. The European Chemicals Agency (ECHA) is leading the effort to restrict PFAS in Europe. As part of this initiative, Germany, the Netherlands, Norway, Sweden and Denmark compiled a non-exhaustive list of fluorinated gases that is part of a joint restriction proposal under the European REACH regulations in early 2023.

The nearly simultaneous adoption of both HFC and PFAS regulations in Europe will have a dramatic impact on both the region’s commercial refrigeration equipment industry, forcing both manufacturers and operators to adapt quickly. By phasing in the regulations and carving out exceptions for special circumstances, the EU hopes to limit the disruptive effect of the new rules while maximizing their impact. Manufacturers have also had time to prepare for both sets of new rules. The HFC and PFAS regulations being put in place today will have a major, long-term impact on the use of refrigerants in the region, helping to meet environmental goals that extend to 2050 and beyond. By being among the first to adopt such rules, Europe will make it much more likely that the next generation of refrigeration technologies will be developed in the region.

According to my research for the study Global Commercial Refrigeration Equipment, environmental regulations tend to have the largest impact in developed countries, as:

• Entities such as the US and the EU have been particularly active in managing environmental impact.

• Global regulations such as the Kigali Amendment often set more aggressive targets for developed countries in an effort to avoid overly hampering emerging economies.

• Less-developed countries tend to have more issues enforcing compliance with regulations.

Regulations aimed at reducing the use of environmentally harmful substances have represented a continuously evolving incentive for technological innovation in commercial refrigeration equipment. Attempts to phase out high-GWP HFCs are driving suppliers to develop products that use alternative refrigerant materials.

Hydrofluoroolefins (HFOs) represent one of the most promising alternative refrigerants, as they have zero ozone depletion potential (ODP) and low GWP. Products using HFO refrigerants such as R-1234ze began to penetrate European markets around 2011, with liquid chillers representing the most common application at present. Penetration of HFO refrigerants in the US and other markets has been slower, in part due to the higher costs of these materials, which can exceed five times the price of HFC refrigerants.

Other alternative refrigerants include ammonia, carbon dioxide (CO2), and hydrocarbons. However, each of these materials has safety issues that limit use

Global demand for commercial refrigeration equipment demand is forecast to expand 5.4% per year to $52.9 billion in 2028. The Asia/Pacific region, North America, and Western Europe are expected to account for 87% of global market gains between 2023 and 2028.

For more information on commercial refrigeration equipment in Europe see Freedonia Group’s Global Commercial Refrigeration Equipment study.

About the blogger: Gleb Mytko is an experienced senior global industry analyst with the Freedonia Group.