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4 Mobile Air-Conditioning

Summary

It is estimated that 148 tonnes of HFC were emitted from the New Zealand Mobile air-conditioning (MAC) sector in 2006, including about one quarter from vehicle retirements. As the HFC MAC fleet ages, emissions are expected to accelerate as more of this fleet retires and releases a higher proportion of the approximately 1600 tonnes HFC contained in vehicles.

Importers of motor vehicles (most having HFC MAC systems) could be made points of obligation at the Customs border to be consistent with a decision to cover imported equipment HFC in the ETS. The advantage of inclusion is that the ETS would then apply consistently across all HFC equipment imports.

The overwhelming disadvantage would be the compulsory market participation for at least 50 and up to about 500 new and used vehicle importers for no clear benefit. ETS inclusion would not drive a MAC technology change and refrigerant recycling will already be incentivised by the ETS coverage of bulk HFC used for servicing.

The automotive industry has used HFC-134a as the refrigerant for mobile air conditioning (MAC) in new vehicles since 1994. HFC-134a is imported into New Zealand for use in the MAC industry through bulk chemical importers and within the air-conditioning systems of imported vehicles. The last car assembly plant operating in New Zealand closed in 1998 and the last truck assembly plant closed shortly after.

The conclusion of the top-down inventory study (CRL Energy 2007) was that 148 tonnes of HFC were emitted from the New Zealand MAC sector in 2006, 27% from vehicle retirements. This retirement proportion is growing rapidly as the HFC MAC fleet ages and the refrigerant HFC bank had grown to an estimated 1600 tonnes by the end of 2006. The top-down methodology accounts for only the servicing refills and does not attempt to estimate the leakage rates so actual annual emissions are likely to be under-estimated. Over a 20-year period, there would be little difference between accumulated actual emissions and assessed emissions – because leakage will instead be assessed in the assumption that retirements are equivalent to emitting the full initial charge.

This section does not consider refrigerated transport, which is included in the Stationary Refrigeration sub-sector.

4.1 Stakeholders and potential points of obligation

Importers of motor vehicles (most having HFC MAC systems) could be made points of obligation at the Customs border to be consistent with a decision to cover imported equipment HFC in the ETS. The advantage of inclusion is that the ETS would then apply consistently across all HFC equipment imports. The overwhelming disadvantage would be the compulsory inclusion of a large number of new and used vehicle importers as ETS participants for no clear benefit. ETS inclusion would not drive a MAC technology change and refrigerant recycling will already be incentivised by the ETS coverage of bulk HFC used for servicing.

4.2 Export Implications

The number of exported vehicles containing HFC in MAC systems is likely to be insignificant. However, if ETS coverage of vehicle MAC is to be seriously considered, there should be a study of the impacts on any small niche manufacturers, e.g. coachbuilders.

4.3 Compliance costs

Default refrigerant charge amounts could easily be developed in relation to vehicle size with sufficient accuracy to minimise ETS reporting requirements. Importers could provide documentation for actual charge amounts for popular models.

Air-conditioning systems were retrofitted (with ‘aftermarket’ units) to new trucks and buses and to used cars. MAC installers confirmed in 2007 that the aftermarket installations peaked at about 1500 per year from 2000–2002 and had fallen away significantly by 2004 so coverage of these units would add minimal compliance costs.

4.4 Potential for alternatives

The Australian Greenhouse Office survey (ICF Consulting 2003) of several MAC manufacturers, distributors and experts on “most promising options for reducing greenhouse gas emissions in 2020” assessed that hydrocarbons were expected to achieve >50% market penetration by 2020 in the MAC sector.

The Motor Trade Association (MTA) has a committee of its MAC members whose key focus is on the end-of-life disposal of MAC systems. An MTA representative (Frampton 2007) stated the EU may phase out HFC-134a in new MAC systems by 2012. CO2-based MAC systems are starting to be introduced in some models. Hydrocarbon-based MAC systems could be developed but US litigation is seen as a major barrier because of the slight fire risk. Japanese vehicle manufacturers have acknowledged the need to address the issue.

The representative said the MTA and many MAC installers were keen to get MfE cooperation to re-invigorate the No Loss Campaign as a means of promoting improved MAC disposal practices. One of the members of the MTA committee said many MAC installers were concerned about the ‘cowboys’ in the industry who did not follow recommended practices (Rogers 2008). His company promoted refrigerant recycling and sells the equipment (~$2000) for servicers to do this.

It is concluded that any actions taken by New Zealand will clearly not influence international vehicle manufacture developments. Refrigerant recycling will already be incentivised by the ETS coverage of bulk HFC used for servicing.

4.5 Price impacts

The impact of a $30 per tonne CO2 price on the average refrigerant charge (0.75 kg HFC-134a) in an imported car MAC system would be a $30 basic price increase, clearly negligible on the price of a new vehicle even with various mark-ups. It would have a much greater proportional impact on low-value used vehicle imports if these were included in the ETS as points of obligation.

Whether or not vehicle importers are covered by the ETS, the bulk chemical HFC used for servicing MAC systems would be covered and subject to a basic price increase of the order of $40 per kilogram. However, there is a large mark-up since the typical retail price (excluding GST) is $40–$50/kg (Rogers 2008) even though the wholesale price is about $12/kg. The $40/kg price increase will have a significant impact (and will depend on the further mark-up) but not as high a proportional impact as the quadrupling of the wholesale price. It would be a factor for some drivers deciding whether to have their MAC system serviced but many would not notice the increase compared with the servicing labour costs.

The price increase would create a much stronger incentive for MAC installers to recycle HFC where the servicing history of a vehicle is well known. One installer said the risk of recycling is that the quality of pooled refrigerant from 10 well-maintained vehicles could be ruined by adding low-quality refrigerant from a vehicle with a poor service record (Rogers 2008). Nevertheless, his company recycles approximately 0.5 tonne each year and he believes this practice will become more widespread with the ETS pricing.

He added that the price impact would have been significant on the retrofitting market when it was at its peak before 2003 because the cost was only about $300. He confirmed there is no longer any retrofitting demand nor any supply of the parts required.

In summary, CRL Energy assesses that the widespread option for ETS pricing would have a negligible impact on MAC vehicle imports or HFC emissions by 2015 compared with BAU.

4.6 Uncertainties

The key sources of inventory uncertainty were the total quantity of HFC supplied to the MAC industry and the vehicle proportions fitted and retrofitted historically (building up the HFC bank). These would not be relevant to the accuracy of measurements required if MAC vehicle importers were made points of obligation.

Default refrigerant charge amounts could easily be developed in relation to vehicle size with sufficient accuracy to minimise ETS reporting requirements. Importers could provide documentation for actual charge amounts for popular models.

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