September 7, 2018 at 5:00 am ET
Many environmental regulations are currently being reviewed under the present administration with an eye to removing and reducing as much regulation as possible. In particular, the Trump administration’s reconsideration of greenhouse gas emission standards developed for the motor vehicle industry under the Obama administration has received a great deal of recent media coverage.
One aspect of this ongoing debate that has received relatively less attention, but has the potential to significantly impact industry, job creation and the environment, is the treatment of mobile air-conditioning credits within the larger framework of greenhouse gas reductions. These credits create a mechanism for the car industry to develop innovations to its vehicle fleet to reduce GHG emissions outside of traditional “tail pipe” changes (i.e. increases in fuel efficiency, reductions in CO2).
Big leaps in greenhouse gas emissions reduction can be achieved through changes to vehicle air-conditioning systems. Many of the refrigerants used in mobile air conditioners have a much higher global warming potential than carbon dioxide by mass (e.g. carbon dioxide by definition has a GWP of 1, while one of the most commonly used refrigerants in car manufacturing in recent decades, R134a, has a GWP of about 1,300). By changing to refrigerants with lower global warming potential or increasing the efficiency of air-conditioning systems to reduce waste and leakages, car manufacturers can acquire tradable credits that grant them flexibility in reaching fleetwide emissions reduction standards.
Air conditioning is now considered standard in the modern car or truck and is an important component of making driving comfortable, and in some cases, safer. However, refrigerant chemicals have an outsized impact on the environment, and changes to air-conditioning systems represent some of the lowest-hanging fruits on this particular policy tree.
Regulation of MAC credits within the United States sits in a larger international policy context, which car manufacturers and related industries are watching closely. While the United States has adopted a flexible credit system to incentivize innovation in mobile air conditioning, the European Union has taken steps to ban certain refrigerants entirely (in particular those with GWP ratings greater than 150).
In a 2016 press release, the Chemours Co., a major producer of chemical refrigerants and the developer of one of the most popular, new modern refrigerant alternatives, R1234yf, cited each of these markets and their respective policies as the central driving force behind their investments in research and development, as well as the construction of a $300 million plant in the United States to produce these new chemicals.
The U.S. regulatory approach of market-based credit systems has helped drive this economic growth and job creation, without resorting to the top-down, command-and-control-style bans adopted in the EU.
This area is an example of environmental regulation driving research and development, as well as investment and job creation within the United States. Notably, this regulation is one with the widespread and active support of the automotive and refrigerant industries. Importantly, these credits incentivize car manufacturers to make changes that have a large benefit-to-cost ratio in terms of costs to manufacture — several new alternative refrigerants require minimal changes to prior air-conditioning systems and provide comparable performance benefits.
Most consumers are unfamiliar with the technical differences in refrigerants and their respective environmental impacts. Yet, despite the relatively large potential societal benefit, these changes in manufacturing do not have a big impact on the cost of cars and do not directly impact fuel efficiency enough to make at-the-pump cost differences a significant factor in vehicle purchase decisions. Thus, by incentivizing innovation in this area, MAC credits are driving positive change in an area that is less likely to be subject to consumer-driven market demand (i.e. relative to increases in economy in the face of rising fuel costs, for instance).
A shift toward low GWP refrigerants will also help the United States meet goals agreed to at the most recent global conference to discuss the Montreal Protocol in Kigali, Rwanda. The Trump administration so far has abided by the Kigali Amendment, and a broad coalition of Senate Republicans and former White House officials has asked the president to send the amendment to the Senate for ratification.
Conservatives, otherwise skeptical of international environmental agreements, are endorsing the deal, largely because it would protect and foster job creation and economic development within the United States and continue the expansion of cleaner, superior, American-made products on the global market rather than inferior, high-pollutant alternatives produced cheaply in foreign markets, notably China. These goals are fully in line with the “America First” priorities outlined by the Trump administration to develop and safeguard American industry in the face of unregulated and unfair practices abroad.
The original Montreal Protocol became the first universally ratified treaty in United Nations history during the Reagan administration. That agreement and subsequent amendments have placed us on the path to recovery with regard to ozone hole depletion.
Since implementation, the chemical industry has been instrumental in developing alternatives; hydrofluorocarbons impact ozone less than the replaced chlorofluorocarbons but unfortunately have a relatively large impact on global warming. Current policy discourse has asked these industries to innovate once again, and in the past several years, they have done so exceedingly well, creating alternative refrigerants that, in some cases, have reduced GWP by 99.9 percent relative to the chemicals they replace.
This regulation represents a rare instance: an environmental policy with widespread industry support and the endorsement of conservatives that involves few trade-offs, changes to engineering or lowered performance. This policy literally gives the U.S. car industry “credit” for driving innovation in this area.
By removing this credit, U.S. companies would lose millions in investment in this area, while simultaneously losing ground, both domestically and in growing global markets, to inferior, high-pollutant chemical alternatives produced outside the United States. By continuing to support these changes in the automotive industry, the Trump administration would keep its promise to protect jobs in the United States, while enacting a landmark international agreement.
Julia Wester is a small business owner, and she received her doctorate in environmental science and policy from the University of Miami in 2016.
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