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A New Year’s Resolution – Phase Out R22 and HCFCs

From 1 January 2015 the use of hydrochlorofluorocarbons to service refrigeration and air-conditioning equipment will be prohibited.  The changes could not be more untimely for the food, retail and hospitality sectors, where hydrochlorofluorocarbons are used to maintain such equipment, especially during one of the coldest times of the year. 

Although ultimately systems will be more energy-efficient and cost-effective, in the short term the financial cost of complying with the changes could significantly impact business’ capital expenditure, particularly those businesses operating across multiple sites.

Panic not … just yet

EU ‘Ozone-Depleting Substances Regulation’ 2009 (EC/1005/2009) aims to enable EU Member States to meet their obligations under the Montreal Protocol, drawn up to stop further damage to the ozone layer. Under the regulations, from 1 January 2010 it was no longer legal to use virgin  hydrochlorofluorocarbons (‘HCFCs’), including the refrigerant gas R22,to service refrigeration and air-conditioning (RAC) equipment, and from January 2015 it is no longer legal to use any recycled or reclaimed HCFCs. But commercially and practically the regulations would make it impossible to maintain existing RAC systems effectively once they have broken down, especially if businesses do not have a strategy to replace existing systems with those which comply with the regulations. 

It will, however, still be lawful to continue using existing equipment which uses HCFCs after 1 January 2015, so long as it does not need to be serviced with such gases; offering some businesses a short-term sigh of relief if they have only recently installed such equipment which may have some time to go before it requires servicing.  Furthermore, the regulations could precipitate the opportunity for businesses to replace existing systems for new ones which meet current and forecast application requirements.

Which businesses are affected?

R22 is commonly used in air conditioning systems, refrigeration systems, blast chillers, cold stores, process coolers and transport refrigeration.  So sectors which are most likely to be at risk under the new regulations include:

  • Food
  • Retail
  • Hospitality
  • Finance
  • Petro-chemicals
  • Pharmaceuticals
  • Health 

Implementation of the regulations comes at a particularly tricky time of year for retailers in the food and non-food sectors as there is greater footfall during the January sales, increased inventory (especially of items which need refrigerating) and tighter margins, not to mention an emphasis on the need for heating during one of the coldest times of the year in the UK.  So planning a phase-out of existing RAC systems really could pay dividends, in terms of minimising the financial and regulatory impact to your business, and seizing the opportunity to seek more energy- and cost-efficient alternatives.

The cost of doing nothing

Where existing systems are working well then the risk is minimal, but ultimately these systems will need to be replaced. Unless businesses are proactive about replacing their existing RAC systems, a breakdown could see the business being closed and could result in damage to stock which needs to be chilled, diminished footfall, and subsequently a fall in revenue.

The legal consequences of breaching the regulations are also sobering.  The regulations will be enforced by the Environment Agency or the local authority.  The enforcement authorities will have the power to enter a business’ premises, carry out investigations, inspect and take copies of any relevant records, and interview any person from the business in relation to the investigation.  If an officer of or a body corporate is found guilty of breaching the regulations, they could face a fine of £5,000 on summary conviction, or an unlimited fine on indictment. 

Strategic phase-out

Given the cost of phasing out  systems, we recommend adopting a plan similar to the following to strategize phasing out systems containing and being serviced by HCFCs, whilst minimising interruption to your business:

  1. Assess risk

Identify all systems containing HCFCs and estimate their associated business risk – some systems may be less business-critical than others or have a longer lifespan and therefore not need servicing so imminently.

  1. Prioritising

Prioritise addressing the systems which would most likely impact the business in the event of breaking down, but continue to manage those which are less business-critical.  Review the breakdown and service history of existing equipment to assist with prioritising systems in need of being phased out.

  1. Decide on a phase-out solution

Decide whether to replace existing systems (which is likely to be the case for most businesses) or convert them to HFC refrigerant systems. 

Factors to consider when deciding whether to replace or convert a system would include the age, energy efficiency, reliability and condition of existing systems, as well as whether some existing systems are no longer operating within their original design specification.

The disadvantage of converting systems may be that a converted plant could have less cooling capacity or increase leakages. Whereas replacing a full system could be safer for manufacturers and contractors, and easy to schedule and manage, albeit more costly than a conversion (approximately ten times more expensive). Therefore we advise that you review risk assessments of existing systems and take a risk-based approach when deciding on the best phase-out solution.

  1. Planning and budgeting

After deciding whether to replace or convert your existing systems, it would be advisable to work with your refrigeration contractor to develop a phase-out of existing HCFC equipment.

  1. Implementation

Throughout the replacement or conversion of existing systems, the implementation of new or converted systems should be continuously reviewed and monitored, to balance both the needs of your business and compliance with the regulations.

For further advice on planning, phasing out the usage of HCFCs and general compliance with the Ozone-Depleting Substances Regulation, please do not hesitate to contact DWF’s Regulatory Team.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Hilary Ross

Executive Partner (London) - Head of Retail, Food & Hospitality

Recognised by The Lawyer as one of the UK’s Top 100 lawyers, I advise clients on compliance and challenges across the EU in relation to products, systems and safety.