P.K. Mahindra REFRIGERATION & AIR CONDITIONING MANUFACTURERS’ ASSOCIATION (RAMA)

1. STAKEHOLDERS WORKSHOP ON HCFC PHASE-OUT MANAGEMENT PLAN (HPMP) Challenges in Refrigeration & Air Conditioning (R&AC) Manufacturing sector in India P.K. Mahindra REFRIGERATION & AIR CONDITIONING MANUFACTURERS’ ASSOCIATION (RAMA) 21-22 Oct 2011, New Delhi

2. INDUSTRY BACKGROUND • Industry Size (2010 ~ 11) US$ (billion) • Air Conditioning Systems 3.2 • Dom.& Comm. Refrigeration 2.6 • Servicing 0.3Total6.1 • Growth of over 20% was recorded in major sub • sectors during 2000 ~ 05 consequent to economic • liberalisation. • Industry made large investments on HCFCs based • technologies for capacity growth during 2005 & 2006 • Capacity expansion was done on the assumption that • there shall be no restrains on availability of HCFCs till • 2015 as provided under original Montreal Protocol Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

3. R&AC SUB SECTORS • R&AC Equipments with HCFCs (R22) refrigerant are • grouped into following sub sectors: • Room air conditioners including non ducted • splits upto 5.0 T • 2. Split air conditioners with ducts above 3.0 T • 3. Precision, Telecom Air conditioning including mobile shelters • 4. Chillers (chilled water for process & air conditioning) • 5. Commercial Refrigeration (water Coolers, others) • 6. Cold Storage (refrigeration equipment other than ammonia • based) • Rail Coach Air Conditioning • Compressors & Controls • VRF Products Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

4. GROWTH ESTIMATE Room Air Conditioners including Non Ducted Splits upto 5.0 T (RAC Sub Sector) • Production: • 2009 : 3.0 m (Actual) • 2010 : 4.0 m (Actual) • 2013 : 8.8 m (Estimate) • 2015 : 15.0 m (Estimate) • Annual Demand Growth : • 2007 ~ 10 : 22% (Actual) • 2011 ~ 12: 32% (Estimate) • 2013 ~ 15: 31% (Estimate) • Penetration Level (p. capita): • 2009 : 3.0 (Actual) • 2012 : 3. 5 (Estimate) • 2015 : 4.5 (Estimate) Room Airconditioners (Million/Nos.) Source: RAMA sub sector committee Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

5. REFRIGERANT REQUIREMENT & HCFC AVAILABILITY • Refrigerant Requirement: • 2009 : 5,678 MT (Actual) • 2010 : 6,885 MT(Actual) • 2013 : 14,825 MT (Est.) • 2015 : 24,571 MT (Est.) • HCFC 22 availability as % of refrigerant requirement: • 2009~12 : 90 ~ 93% • 2013 : 38% • 2014 : 30% • 2015 : 21% Room Airconditioners (Million/Nos.) Source: RAMA sub sector committee Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

6. ALTERNATE REFRIGERANTS CHARACTERISTICS Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

7. HC-290: SAFETY CONSIDERATIONS • Lower explosion limit (LEL): 2.1% approx. 39 g/m³ • Upper explosion limit (UEL): 9.5% approx. 177 g/m³ • Minimum ignition temperature: 470 C • Safety Classification: A3 • Human occupied space (Max charge) - EN 378 : 1.5 kg • Min room area - EN 378: 57 (m2/kg of HC-290) Source: GIZ Proklima Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

8. Refrigerant Evaluation • SEER Comparison(cooling mode) • - 3.5kW-Room AC in Europe • Peak power comparison • (R410A ratio) under cooling condition • Outside 35°C, room 27°CDB/19° CWB R22 (1.14kg) HFO1234yf (1.32 kg) *2 R32 (0.84kg) *1 Propane (0.37kg) *3 If IEC is disregarded, the charge volume is 0.58kg, and SEER could be same as R22 CO2 (0.84Kg) *4 R410A (1.2kg) 0.7 0.8 0.7 1.0 1.3 0.9 1.0 1.1 Power ratio Efficiency ratio In terms of SEER, R32 is best! CO2 is the worst. In the peak power under cooling condition. R32 is better than R22 & R410A. HFO and CO2 will cause peak power problems in large cities. Source: Daikin Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

9. OVERVIEW OF LOW GWP REFRIGERANT OPTIONS Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

10. HFO-1234yf REFRIGERANT • Extracts from Honeywell Fact Sheet • Developed for mobile air conditioning in vehicles • Honeywell and Dupont are currently separately preparing • for the commercialization of the product • The EU differentiates gases into two categories: highly flammable and non-flammable. That is why HFO – 1234yf has to be called highly flammable • RAMA Concerns: • Not developed for RAC sector. Suitability? • Commercialization yet to happen • Patented product • Extremely high pricing • Monopoly of two companies: availability? Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

11. VIABLE OPTIONS FOR AIR CONDITIONING SUB SECTORS Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

12. VIABLE OPTIONS FOR REFRIGERATION SUB SECTORS Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

13. CHALLENGES OF CONSUMPTION CONTROLS • Over 90% HCFC based Production Capacity: • Large investments made in capacity expansion for meeting • growing demand during 2005 ~ 07. Investments have to • depreciated during short span of five years (2007 ~ 2012) • Market Growth & Consumption Control: • Non ODS refrigerants requirement shall be 60% in 2013 & • 79% in 2015 • At present, HFCs are only proven refrigerants: • Industry is gearing up to make new investments, product • development , production capacities, skill development on HFCs • based technologies • High GWP of HFCs: • Evaluation of refrigerants should be on the basis of Life Cycle • Performance and not high GWP alone Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

14. CHALLENGES OF CONSUMPTION CONTROLS (2) • Major tasks to be performed for implementation • of consumption controls shall be: • Technology tie up / Product development • Refurbishing/setting up of new manufacturing, testing, • & related production support facilities • Vendor development for new components/raw materials • Training of technical staff relating to: • - Manufacturing/testing • - Servicing (own employees) • - Channel partners (distribution/servicing) • Consumer awareness campaigns • All these tasks are to be performed without disturbing present structure to sustain business growth Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

15. CONCLUSIONS (1) • HFCs such as R-410A and HFC-134a are the only Technically proven and Economically viable Alternatives to HCFC-22 for all Air-Conditioning and Refrigeration Applications; however import dependence and high prices are serious concerns • R-290 being highly flammable may be applied for very small capacity units with lot of safety precautions: limited application • There are no other technically proven and economically viable options Available for the industry. Some work is reported on low GWP HFOs and HFC mixtures. The time frame of such R & D work is unknown and may have a number of barriers: • Flammability Issues • Toxicity issue especially toxicity of products on dissociation • Extremely high pricing • Limited availability Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

16. CONCLUSIONS (2) • The phase-out of HCFCs relies only on the use of technically proven and economically viable solutions ; currently HFCs are the widely used refrigerants to replace HCFCs in most of the developed countries including USA, Japan. • Air-Conditioning Sector is very price sensitive and Refrigeration and Air-conditioning (RAC) Industry is to provide cost effective solutions to cater the needs of Industrial and for GDP growth in the country. • The RAC Industry cannot afford frequent changeovers as it involves huge capital investment • The RAC industry has a very challenging task ahead ; to cater the needs of growing demand and decision of capital investments Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011

17. WAY FORWARD! • Availability of low GWP refrigerants for RAC industry does not appear viable in the near future • Large capital investments are necessary to switchover and also to enhance capacity to sustain growth in a growing economy like India. Comprehensive work is essential to establish technically proven alternatives at comparable prices. • Need for a mechanism to fund second transition to low GWP refrigerants as and when these are viable Stakeholders Workshop on HCFC Phase-Out Management Plan (HPMP) - 21,22 Oct 2011