The issue of economic sustainability in adopting newer and greener technologies, especially in the refrigeration space, is not as adverse as governments think it is, according to Randal Newton, Vice-President, Engineering Operations, Ingersoll Rand. As nations recently agreed to amend the Montreal Protocol to limit the emission of hydroflurocarbons (HFCs) that have very high global warming potential (GWP), companies such as Ingersoll Rand will be in the spotlight, as they are developing solutions that the world may well apply tomorrow. In a conversation with BusinessLine, Newton explained why the changes need not be as stark as many developing countries fear.

Indian industry is apprehensive about non-HFCs and low GWP refrigerant alternatives. Your comments...

One of the biggest challenges that refrigeration and air-conditioning manufacturers face is that often the new alternatives require a design change. Many Indian companies have recently gone through a design change — from R22 gas, which will be banned in 2020, to R410a, which is the most popular refrigerant in the world today. They are reluctant because they think they will have to invest once again in product redesign.

The work that we have been doing on refrigerants is focused on short-term alternatives with much lower GWP — 50-60 per cent lower. In America, we announced that we would start producing centrifugal chillers with a refrigerant called R514A, which is a near drop-in replacement for R123, which is being phased out.

We also announced a product in 2015 that uses refrigerant R513A, which is a near drop-in for R134A. In both these cases, we did not have to do extensive retooling or design work to be able to get 50-60 per cent reduction in GWP. We worked very closely with some chemical manufacturers to develop alternatives to R410A.

R452b is actually a better refrigerant at high ambient temperatures. It is an almost perfect drop-in for R410A. So, companies that have already done the conversion to R410A can move forward with this refrigerant without having to make big investments.

The restriction today is that it is a low-flammability refrigerant and we have to make sure it is safe, because protecting property, the people who manufacture these and service them, and our customers, is our number one priority. We believe that we will be able to apply this refrigerant in the very near future without having expenditures of new product development, new tooling etc. Many of the Indian industries and manufacturers are not aware that this refrigerant exists and have not had the chance to test it.

Another refrigerant manufacturer has also announced an alternative that is a very close drop-in to R410A. It’s non-flammable, but they have not concluded toxicity testing on it yet.

One big concern with these new alternatives is that you are developing them as patents, which could make the adoption expensive...

Certainly, all are here to make money. One of the ways we differentiate ourselves from competitors is by doing technology research and patenting. So I understand the concern, because if you have a patent you can limit the number of people that use the product or can collect royalties for it.

In the refrigerant space — especially those used for lower capacity window ACs, room ACs, mini-splits, multi-splits, unitary air-conditioning products — it is very likely the world or a region will only have one or two solutions because the service organisations can’t afford to train their employees to service multiple solutions. So, we would probably settle on one or two solutions.

If you put too many restrictions on the use of a particular refrigerant, from a cost standpoint, it will not end up being one of these solutions. And if it’s not one of those solutions then the patent means nothing. I think it’s a short-term problem and will resolve itself. I think the industry can do things to make patents affordable at a lower cost.

The developing world has been asking for technology transfers to adapt to new technology. Your views?

Ingersoll Rand has innovations and we want to sell them anywhere people want to buy. With regard to transfer of technologies, if it is to competitors, it becomes a bit sticky. But I believe that today we can make a significant impact at very low cost by using some of these alternative refrigerants that are near drop-in replacements. The industry already has the technology to be able to use those refrigerants without any technology transfers.

There are other things that we are working on. For example, we have developed a technology that allows use of significantly less refrigerant per unit of cooling capacity. If we can save 30 per cent of the refrigerant for a unit of cooling capacity, that solves a huge part of the problem because the demand-side for that refrigerant goes down.

Transferring that technology to competitors would be something our shareholders probably won’t appreciate. But some of these technologies aren’t that new and are probably available anyway.

If we have the opportunity to have a dialogue and explain the problem and the potential solution, I don’t think it would be as big an issue as governments think it is today.

A recent study on home ACs showed that advertised efficiency doesn’t meet the ground realities. Is there a solution?

When we do customer surveys, the most important thing to them is energy efficiency. The issue of units not performing as advertised is a serious global problem. I think every country has to have some standards for testing and qualifying ACs. We do that in the US with the Air-conditioning, Heating, and Refrigeration Institute (AHRI). I think there are ways we could hold companies more accountable for energy efficiency of their products to make sure that what they advertise is what they are selling.

But, the other part of the problem is that even with very efficient ACs and components, you’re not guaranteed to have an efficient installation. The electrical meter is on the building, not on an individual piece of equipment. So, if you don’t size the system properly, don’t configure, don’t control and maintain the system properly, your energy efficiency is not going to be very good. We believe in many cases we can save 20-40 per cent of electricity demand for ACs on a building by doing these four things.

Of late, the need for companies to be climate-sensitive has become more vital. Does it have significant implications?

We made a climate commitment to the UN and to the Clinton Global Initiative a little over two years ago, where we said in the products we ship, we are going to reduce direct emissions from greenhouse gases by 50 per cent by 2020 and have new refrigerants in all our products by 2030. This was ahead of any phase-down schedules that were announced globally.

We also said we are going to reduce the greenhouse gas footprint of our facilities by 35 per cent by 2020 and we are going to invest $500 million in R&D on high-efficiency, low GWP products. The response from our employees was very positive. The engagement of our employees and our ability to attract and retain talent went up.

What about shareholders and investors?

There is a class of investors that makes this very important. There are mutual funds that invest in companies that are greener, more environmentally-sensitive. But I don’t think it is that important for most investors, who are happy if they get good returns. It’s a minority group today, but it is growing quickly. I expect over the next 25-30 years, this will become a more important topic.

How much business sense does it make to be mould your operations to be more sustainable?

We believe we can differentiate ourselves as a company by selling the most energy-efficient products. I think being sustainable for the future, having the most energy-efficient products, leading in that regard, is going to be a great investment.

Related Topics
comment COMMENT NOW