Recent changes to the Emissions Trading Scheme (ETS) will see increases in synthetic “F” gas refrigerant prices from next month due to increases in the New Zealand Carbon Unit (NZU).
R404a refrigerant, one of the industries mostly commonly used refrigerants, will see the biggest impacts as it has the highest Global Warming Potential (GWP) of all synthetic refrigerants on the market. With a GWP of 3922 , the impact of the NZU cost alone on R404a is now $135kg, due to the direct cost increase in the NZU, with a forecast increase in September of $35-$40kg.
This will significantly increase costs for refrigerated sites needing to replace synthetic F-Gas refrigerants due to ongoing maintenance, leaks or in the event of a catastrophic event.
Prices of synthetic refrigerant have been rising in response to global commitments to reduce the use of high GWP refrigerants due to their link to global warming. However, prices had leveled in New Zealand as NZU prices were capped by the schemes option that allowed unlimited units of carbon at $25.
With reforms to the ETS now in place, the NZU is now trading around $34 with the new price controls allowing carbon units to sit between $20 – $50. At the $50 cap this would add an additional cost to R404a of $200kg.
As previously communicated, sites on synthetic refrigerants have cost and supply risks given New Zealand’s reliance on overseas manufactures and ongoing developments in legislation. Supply of synthetic refrigerants has been affected globally as governments phase down and ban synthetic refrigerants, such as the suspension of sale of R404a in Europe and UK from January 1, 2020.
Within New Zealand supply of some refrigerants will continue to be restricted as overseas supplies shrink in line with global phase down commitments and as New Zealand importers respond to our own phase down regulations that have now come into effect.
These impacts have been seen in R404a moving from around $30kg five years ago to current prices of around $300kg.