Refrigerant and Energy

Regulations Update

E360 Forum • Chicago, IL • October 5, 2017

Don NewlonVice President/G.M., Food Retail, Cold Chain

Emerson

The Next Four Years Will Be the Most Dynamic Period of Change

in the History of Our Industry

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Supermarket Architecture Trends Begin Here:

the Kigali Amendment to Montreal Protocol

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• October 15, 2016

• “38th Meeting of the Parties to the Montreal Protocol on Substances That Deplete the Ozone Layer”

• Global agreement on HFC phase-down reached by 197 countries of the world in Kigali, Rwanda

Refrigeration Architectures for the Future Are Linked to Global Regulatory Changes in Selecting Refrigerants With Low Ozone Depletion and GWP.

Other Refrigerant Regulation Activity

Current Regulatory Proposals Target 150 GWP for Multiple Applications,

Creating Demand for Refrigerants With GWPs of Less Than 150. 4

Environmental Canada (EC)**:

proposal November 26, 2016

Commercial application GWP limit Date

Refrigeration – centralized

systems (MT/LT racks)1,500 2020

Refrigeration – condensing units 2,200 2020

Refrigeration – LT stand-alone 1,500 2020

Refrigeration – MT stand-alone 700 2020

Foams 150 2021

Mobile refrigeration 2,200 2025

AC – chillers 700 2025

Domestic refrigeration 150 2025

F-Gas (EU): effective May 20, 2014

Commercial application GWP limit Date

Self-contained refrigeration 2,500 2020

Stationary refrigeration 2,500 2020

Self-contained refrigeration 150 2022

Centralized refrigeration 150 2022

– Except top side of cascade 1,500 2022

CARB: Short-lived climate pollutant reduction strategy

— proposal Nov. 28, 2016

Commercial application GWP limit Date

All refrigerant sales 2,500 ?

Non-residential refrigeration 150 ?

AC (non-residential and

residential)

750 ?

** http://www.gazette.gc.ca/rp-pr/p1/2016/2016-11-26/html/reg1-eng.php

• Phase-down (NAP) option also proposed

(2019 — 90%; 2024 — 65%; 2030 — 30%;

2036 — 15%; baseline 2011–2013)

Refrigerants and Regulations:

10 Significant Targets Over The Next 4 Years

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Breaking News: On August 8, 2017, the U.S. Court of Appeals DC Circuit Vacated the EPA’s Foundational 2015 Rule.

2016 2017 2018 2019 2020

Supermarket (Rack)

Walk-In (Remote CDU)

Cooler

Freezer

Reach-In (Stand-Alone)

Cooler <2,200 BTU

>2,200 BTU

Freezer

Ice

Machines

Soft Serve/Frozen Bev.

<2,500 GWP

<2,500 GWP

20–40%

<600 GWP

<1,500 GWP

30–50%

5–15%

1/1/17

1/1/18

3/27/17

1/1/18

7/10/20

1/1/19

1/1/20

20–30%

<600 GWP

1/1/21

DOE published Final Rule

EPA approved (listed) R-452A 7/21/17

7/10/17

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2

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EPA Is Serious About Enforcing Regulations The Consequences Can Be Significant

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Court Ruling:

• The 2015 SNAP ruling (Rule 20) which de-listed certain HFC’s like R404A was struck down by the court.

• The Court ruled EPA had authority to phase out ozone- depleting substances, but not HFCs which are non-ozone depleting.

• If the court’s ruling stands, the 2015 SNAP Rule 20 is vacated altogether.

• The Court issued an order withholding the decision, so the EPA July 2015 SNAP rule is in place until after the rehearing petition is resolved.

Appeal:

• On September 22, 2017 Honeywell and Chemours filed a petition to the Court request a rehearing of the case.

– The Court could deny the rehearing petition or rehear the case.

– No timeline exists on decision whether or not to rehear case but the Court could provide an indication of which way it is leaning by requesting additional briefing.

August 8th Ruling By D.C. Court of Appeals Declares EPA Does Not Have

Authority To Phase Out HFC Refrigerants

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Response & Next Steps:

• In the next few weeks we will have an indication

• Stay tuned for future details on Court process.

• States like California may act to fill the void and potentially create regulations on HFCs.

Development Approach to New Refrigerants

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R-410A

Like

Capacity

R-404A &

R-407/22

Like

R-134a

Like

GWP Level

400–675

< 1,500

~600

~300

HFO 1234yf

HFO 1234ze

ARM-42

R-410A

R-22

R-407A

R-407C

R-407F, R-452A = XP44

ARM-35

0 500 1,000 1,500 2,000

Pressure

or

R-32/HFC/HFO

Blends

R-32/HFO

Blends

HFC/HFO

Blends

R134a

CO2

R-404A

R-507A

DR2, N12, ARC 1

R290

NH3

A1 – Non-Flammable

A2L – Mildly Flammable

A3 – Flammable

R-123 Like

(V. Low Pr.)

(3,922)

R-32

R-32/HFO

Blends

R-448A = N40

R-449A = DR33

R-449B = ARM-32

N20

R-450A = N13

R-513A = XP10

R-444B = L20

L40, DR7

ARM-20b

HDR110

DR3

ARM-20a

R-446A, R447A, ARM-71a

<150

B2L – Toxic, Mildly Flam.

Qualitative — Not to Scale

12013

Legacy22015

32017

A1 – Non-Flammable

A2L – Mildly Flammable

A3 – Flammable

B2L – Toxic, Mildly Flam.

This List Is Subject to Change. Please Contact Emerson Representatives for the Most Current Status.

Likely Refrigerant AlternativesEmerson’s Perspective and Development Path

Volumetric Capacity/

PressureNaturals

Mildly Flammable (A2L)

HFO and Blends

Lowest GWP Non-Flammable

(A1) HFC/HFO BlendsToday’s Non-Flammable (A1) HFCs

Elevated

Medium“R-404A Like”

Low“R-134a Like”

GWP 0–5 0–150 500–1,300 1,300–4,000

R-744 (CO2)1

R-290 (Propane)

3

R-717 (Ammonia)

0

R-455A (HDR-110)

146

R-454C (DR3)

146

HFO-1234yf

<1

HFO-1234ze

<1

R-449A (XP40)

1,282

R-448A (N40)

1,273

R-513A (XP10)

573

R-450A (N13)

547

R-507A

3,985R-407A

1,923

R-134a

1,300

R-407F

1,674

R-407C

1,624

R-404A

3,943

In Production Not SNAP Listed,

Next in Development

Approved or in Development In Production

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R-452A

2,140

Dept. Of Energy Regulations Summary

Energy Mandates Have Evolved To Become Extremely Significant

•Effective March 2017 on New Equipment

•CRE Measured in kWh/24-Hour Day

–Each Equipment Class Assigned

Equation Accounting For Total Display Area

(TDA) or Volume

Industry Reach-In Solid Door Refrigerator Energy Draw

• Effective January 2020 on New Equipment

–MT June 2017: Report AWEF/Label

–MT Jan. 2020: AWEF Enforcement

–LT Jan. 2020: Report/Label/Enforcement

• Measured in 3 Major Components Using

AHRI-1250

• Effective January 2018 on New

Equipment

• ACIM Measured in kWh/100 lbs

Ice

• Each Equipment Class Assigned

Equation

Commercial Refrigeration

Equipment

Walk-In Coolers and

Freezers (WICF)Automatic Commercial

Ice Makers

20% to 86% Energy Reduction Required,

Depending on Class

5% to 25% Energy

Reduction Required

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1.84

Baseline

3.92

“Max

Tech”

4.79

STD

3.12

Final

STD

Each dot represents

an added technology

30% to 37% Energy

Reduction Required

The Markets We Serve Are Significant Consumers of Energy. We Take It Seriously.

Compressors Are the “Engine” of the System

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Industry Preparedness to Meet Compliance Dates

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More Than Half Now Have a Basic Plan in Place, but 80% Are Not Ready for the Change.

Yes52%

Not yet44%

Level of Preparedness:

EPA Plan in Place (n=46) DOE Plan in Place (n=47)

13% 52% 15% 17%

Very prepared Somewhat prepared Only slightly prepared Not at all prepared

15% 45% 19% 17%

Yes57%

Not yet36%

Level of Preparedness:

*Source: Emerson ResearchCR1. Does your company have a plan in place to meet the compliance dates?

CR2. Overall, how would you rate your company on being prepared to meet the compliance dates?

Product: The Majority Expect Components

Will Change Based on the Regulations

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Top-2 Box

CP3. Considering the impacts of meeting the new regulations for the DOE and/or EPA, please indicate the extent to which you agree or disagree with each statement below.

(n=51)

I expect some

components will

change.

I expect some of our

products to become

obsolete.

I expect component

costs to increase.

89%

63%

73%

5 = Completely

Agree4 3 2

1 = Completely

Disagree

77%

53%

51%

12%

10%

22%

10%

14%

20%

2%

10%

4%

14%

4%

(n=51)

Plants: Capital Investments Needed to Meet

DOE Regulations

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40%

32%

11%

6%

11%Most foresee needing

capital investments within their organizations to meet

DOE regulations (72%).

Significant investments in capital

Some investments in capital

Limited investments in capital

No investments in capital

Don’t know (n=47)

CP1. Would you say that DOE regulations are creating a need for your company to make…

People: Resource Planning to Meet DOE Regulations

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The majority plan to use existing internal sources and staff;

however, nearly one-quarter plan to hire additional staff in

order to do so.

(n=47)

CR10. In terms of resources needed for any redesigns in order to meet the new DOE energy efficiency

standards, are you…

47%

21%

6%

6%

2%

17%

Planning to use existing internal resources and have the staff

Planning to use internal resources, but need to hire

Planning to use external resources for the redesigns, and feel confident about it

Would like to use external resources, but unsure who to use

Would like to use external resources, but have some reservations

Does not apply to us

A Resource: E360 Is Helping Making Sense of the

Pressing Regulatory Issues in Refrigeration

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Our Industry’s Approach to Innovation Will Need to Change

• Create and foster an environment of disruptive innovation that can help develop “out of the box or no box” thinkers and doers.

• Encourage holistic thinking, with a global systems point of view that can lead to creative solutions for the ultimate user (customer pain points, today and in the future).

• Foster bold collaboration within Emerson, and with academia and industry partners that leads to novel ways to solve our problems.

• Use stimulating real end-use scenarios that can help the thinking process and turn ideas into solutions that work.

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What Is The Helix Innovation Center?

It is a building which fosters an environment for academia and

industry collaboration. The Helix is dedicated to advancing

research and education in heating, ventilation, air conditioning

and refrigeration technologies.

The Modules The center features interactive real-world environments, or

modules, designed to spur innovation and help advance the

technology used in homes, commercial buildings, supermarkets,

restaurants and data centers.

Home Building Data Lab Kitchen Market Chiller

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Ecosystem Approach to Sustainability

Stakeholder

Technology

Environment

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Environment Trends

Environment

Commercial square footage of retail food space

per capita last year set a record, with 4.15 square

feet of food retail per person, nearly 30 times the

amount of space allocated to groceries at major

chains in 1950

“Click & Collect”

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Evolving Technology

Technology

Direct Expansion

Simple, industry standard technology

Booster Self-Contained

Increases efficiency and enables CO2 (low GWP)

Easy install, simple technology, enables low-charge natural

refrigerants

Fresh

Frozen

Fresh

Frozen

Desuperheater

Fresh

Benefits:

BUT … none of the systems meet all the needs.

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Stakeholder Needs

Serviceable Easy to maintain for new & experienced technicians

Simple Less complexity

Safe Customer safety is paramount

Stable Reliable and efficient

Smart Controls are easy and intuitive to use

Sustainable Addresses energy, environment and economicsStakeholder

Questions?

DISCLAIMER

Although all statements and information contained herein are believed to be accurate and reliable, they are presented without guarantee or warranty of any kind, expressed or

implied. Information provided herein does not relieve the user from the responsibility of carrying out its own tests and experiments, and the user assumes all risks and liability for

use of the information and results obtained. Statements or suggestions concerning the use of materials and processes are made without representation or warranty that any such

use is free of patent infringement and are not recommendations to infringe on any patents. The user should not assume that all toxicity data and safety measures are indicated

herein or that other measures may not be required.

Thank You!

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