Chemical Firms’ Drive for Profit Leads to Unlikely Actions that Support Climate Change Fight

Monday, October 17, 2016
Honeywell CEO David M. Cote (photo: Chip Somodevilla, Getty Images)


By Hiroko Tabuchi and Danny Hakim, New York Times


It might seem surprising to find the world’s chemical companies on the front lines of preventing climate change, fighting to disrupt their own industries.


But in a sweeping accord reached on Saturday in Kigali, Rwanda, companies including Honeywell and DuPont were among the most active backers of a move away from a profitable chemical that has long been the foundation for the fast-growing air-conditioning and refrigeration business.


The companies were driven less by idealism than by intense competition, and a bet that they could create more environmentally friendly alternatives.


Still, some environmentalists say the aggressive move away from hydrofluorocarbons, or HFCs, provides a template for other industries to follow.


“They learned that without a rule change, their new products couldn’t compete,” said David Doniger, director of the Climate and Clean Air Program at the Natural Resources Defense Council, based in Washington, D.C. “They woke up and said, ‘The science is real.'”


“We wanted them restricted for purely environmental reasons. The companies wanted them restricted for many other reasons,” including profit, Doniger said. “But the point is that they had a certain common interest with the international community.”


The chemical industry’s response stands in stark contrast to the foot-dragging, and in many cases the outright obstruction of climate regulations, by the big oil companies.


Enron, Chevron and others have been criticized for lobbying against rules to curb greenhouse gases for decades, even though their own researchers have warned of the risks of climate change.


Some environmentalists contend that the chemical companies were allowed to have too much input into the Kigali deal. They also say the deal could have been more ambitious in timing and scope.


And there are concerns that many producers in countries will not profit as quickly, consolidating the power of the world’s biggest companies. Much of the resistance to the agreement came from China and India, which feared that some of their chemical manufacturers would be shut out, or that their consumers would face higher prices.


“Although we welcome the outcome and there is progress, it’s being dictated by the industry,” said Paula Tejón Carbajal, the global business strategist for Greenpeace in Amsterdam.


The Kigali deal is the latest chapter in what has been at times an environmentally disastrous role played by the air-conditioning and refrigeration industry.


For decades, a class of chemicals called chlorofluorocarbons, or CFCs, were used widely in air-conditioners and refrigerators, as well as in aerosol sprays and cleaning products. But scientists warned that CFCs deplete the ozone layer, which protects the earth from the sun’s ultraviolet rays. Chemical companies first resisted, saying that alternatives were not economically viable. “They were awful, just like the coal industry,” Doninger said.


But consumer concern about the chemicals led to slumping sales, and a handful of countries banned CFCs. In 1987, the Montreal Protocol agreement was created to completely phase out those chemicals.


The alternatives available at the time, HFCs, were greenhouse gases with 1,000 times the heat-trapping potency of carbon dioxide. Concerns over those chemicals spurred campaigns by environmentalists to phase out HFCs as well.


This time, chemical producers raced to get ahead of any new round of regulations. Even as the switch to HFCs was taking hold in the early 2000s, Honeywell and several other companies began research and development programs to study alternatives with far lower warming potential.


Europe tightened its regulations in 2011, with stricter laws aimed at phasing out HFCs in car air-conditioners. Regulators in the United States gave credits to domestic automakers for switching to HFC alternatives.


In 2012, Honeywell set up a production base just north of Shanghai to make a more environmentally friendly HFC alternative known as HFO-1234yf. The company followed with a second plant north of Tokyo, and is set to open its largest production base in Geismar, Louisiana, early next year. It has spent $900 million on its alternative coolant program.


Since then, Honeywell has publicly voiced its support for stricter regulations, and in 2014, was one of a group of companies to partner with the Obama administration in its bid to make amending the Montreal Protocol a priority.


With the world phasing out HFCs, the company is set to reap the benefits of its investment. Though Honeywell does not break out specific figures for its chemicals business, it has said that sales of its HFC alternatives are rising fast, helping the company grow its annual revenues from its wider fluorine business by double digits to over $1 billion.


“This is an area where we are aligned with the environmental benefits,” Kenneth Gayer, vice president of fluorine products at Honeywell, said in an interview. “We anticipated the need for these regulations before people were even talking about global warming. Now, the world is going to use alternatives in a big way.”


Other options are now available, including systems that use propane or ammonia, and companies throughout the supply chain are racing to adopt them. Coca-Cola, for example, has put more than 1.8 million refrigerated vending machines and other HFC-free equipment into service.


Still, some environmentalists caution against what they see as excessive influence by the corporate sector in shaping the way forward for cooling technologies.


Daikin makes a low-cost HFC alternative called HFC32 that has a relatively small global warming impact, and is seen as useful for markets like India. Daikin, based in Osaka, Japan, makes both air-conditioning hardware and chemicals. It has been putting some of its patents in the public domain to encourage local manufacturers to use its chemicals.


Carbajal, of Greenpeace, saw the aggressive promotion of HFC32 as problematic. The industry, she said, decides “what is low and what is high, and that’s why we are very concerned.”


Carbajal said that while there was a range of better alternatives to HFCs, those were not the ones being adopted in some countries. “The problem is that the ambition has not been as high as we expected,” she said.


Damian Thong, who heads Asia technology research at Macquarie, said Daikin had backed HFC32 in an attempt to balance warming potential and higher energy efficiency.


Emissions from air-conditioners also come from generating the electricity they consume, Thong said. “The issue being glossed over is that focusing on global warming potential alone may be bad for the environment still,” he said.


Despite the remaining issues, the Kigali deal was an example of an emerging dynamic, where companies pre-empt environmental policy changes by developing more planet-friendly products, then push for regulation that grows that market, environmental experts say.


“More and more companies are looking further and further down the timeline to see what changes they can expect, and what they need to phase out of their products,” said Baskut Tuncak, a lawyer at the United Nations specializing in toxic chemicals.


“It shows regulations do drive innovation,” Tuncak said. “The more we have a global approach, the better it is, even for businesses.”


Javier C. Hernández contributed reporting.


To Learn More:

Big Oil Shareholders Reveal Support for Environmental Proposals, Even as They Reject Them (by David Koenig, Associated Press)

Big U.S. Firms on Board to Pay Carbon Fees, Signaling another Republican Party Rift (by Danny Biederman and Noel Brinkerhoff, AllGov)

Climate Change Sends Big Agribusiness Companies North to Buy Land to Plant Grain (by Matt Bewig, AllGov)


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