The Door is Wide Open & Your Profits are Stepping Out

May 17, 2019 / by Ted Atwood & Jennifer Brosius

Together we lose $27 billion dollars (US) - if you own or manage a building, your share is $6,750/year

We regularly share information about how to better manage refrigerants, we talk about their impact, results from our work, and stories we hear from others. This week we’re reviewing a report by the EIA (Environmental Investigation Agency). Yes they are a European environmental group, and their goal of spreading climate change awareness may seem out of touch with the day to day responsibilities of the average building owner/manager in the US. But if you replace the word climate change with lost profit, this story has some revealing results.

You don't know where your gasses are coming from, or where they are going

To start with, leak rates remain at 25% and they have not gone down in 25 years, so regulations are not having impact on emissions. Then consider most refrigerants are manufactured overseas. At last count, 23 states and 1 US territory are adopting regulations that are stricter than the federal government, which is prompting equipment manufacturers to voluntarily accelerate the transition to next generation equipment. The remaining 27 states will be indirectly impacted because manufacturers will be making and shipping the same equipment to all 50 states.

What does that have to do with a business in the US?

Undermined regulation

We’re all aware that the federal government has been considering rolling back environmental rules. We are all watching as the states are fighting these rollbacks and passing their own regulations, a battle that’s creating a continually shifting patchwork of regulations that can be costly and time consuming to keep up with.

Then there are the tariffs

The much-discussed tariffs targeting China include HVAC/R equipment and gas. So your equipment, parts and gasses are increasing in cost. These cost increases directly cut into your profits, but it could also cause delays in crucial repairs and maintenance, leading to a chain of more issues that cost you money:

• Lost energy (1:1 ratio between energy and leak rate)
• Extra labor
• Broken equipment
• Lost food or other refrigerated products
• Lost productivity


If food loss and waste were a country, it would be the world’s third largest emitter of carbon next to China and the United States


Let's look at the numbers

The US leaks 600 million pounds of refrigerant per year. If you estimate the cost per pound at $45 (cost on average to Commercial Property Owners) that’s $27 billion per year. There are roughly 4 million buildings in the US, which would be $6,750 of lost gas per building per year.

Looking at it from another angle, there are about 250,000 technicians installing gas in these buildings. They are installing $108,000 of gas every year, that’s $2,000 a week or $400 a day (on average). As it’s likely refrigerant costs will double, the service providers have to invest quite a bit in refrigerants for every truck they have out there. That’s also a lot of trips to the supply house, a lot of recovery cylinders, and then there is the time spent, and the carrying costs - so if your billing cycle is 45 days it means that on any day you could have as much as $13,000 in receivables tied to refrigerant.

Back to the top...

Do you know where your refrigerants are coming from? Do you know where they are going? Staying informed at every level is essential in keeping control of these costs. Where are your vendors getting their supply? What is your record-keeping process? Do you even know how much of how many refrigerants are installed in your building?

The EIA report is valuable even if your focus isn’t on the environment. But we know your bottom line is important, and this report does a good job of pointing out where the weaknesses are in the supply chain, and why after 25 years there has been no improvement. The EIA has done well at exposing this 100 billion ton of carbon loss issue, but look just beyond that point and you’ll find the $4.5 trillion direct cost. It has already cost us more than $400 billion since 1995 to vent these refrigerants, and that means that every building has lost $100,000 (or more) directly from refrigerants that have leaked. Then there are all the other related indirect costs we reviewed which are costing you 200% – 400% more.

At trakref® We know logistics, operations, and policy, and have designed our system to protect owners and support service providers. To help you stay informed, we’ve included a link to download the EIA report below, which explains the mechanics of how you’re losing money. Trakref® can help you save it.


Stay informed - click below to download the report!

Download the EIA Report: Doors Wide Open

 

Topics: Facilities Management, HVAC/R, Compliance Reporting, Industry Insights, Refrigerant Management, compliance, refrigerants, private governance, Regulation, best practices, HFCs, EIA