U.S. chemical makers and appliance manufacturers say they could cede global market share and risk stranding investments if lawmakers can’t reach a deal on a measure to limit climate-warming coolants.
Right now, U.S. industry stands to lead the development of climate-friendly replacement chemicals and the cooling appliances that use them. Without a federal framework, though, the United States risks losing its foothold, several chemical and appliance companies told senators during a monthlong virtual public hearing on a bill to phase down hydrofluorocarbons, or HFCs.
If the bill stalls, it could undercut investments and send jobs to Europe and China where policy signals are stronger, those companies and groups said.
The bill is co-sponsored by Louisiana Republican Sen. John Kennedy and Delaware Sen. Tom Carper, the top Democrat on the Senate Environment committee, and it boasts support from a third of the Senate, split evenly between parties. The legislation would gradually phase down the production and consumption of HFCs, refrigerant chemicals that are potent greenhouse gases, over 15 years by authorizing the Environmental Protection Agency to implement an allowance trading program, establish management standards, and set sector-specific restrictions.
But it’s hit some major opposition, including from the chairman of the environment panel, Wyoming Republican John Barrasso, that ultimately derailed a broader bipartisan energy bill in March.
“Having a federal HFC framework in place would be critically important,” said Samantha Slater, vice president of government affairs for the Air-Conditioning, Heating, and Refrigeration Institute. That’s especially true as U.S. manufacturers endure the economic downturn and supply chain delays caused by the pandemic, she said.
Slater noted U.S. companies have invested significantly to transition away from HFCs. “We want that to not only continue, but we also don’t want the investment that’s already been made to be stranded,” she told the Washington Examiner. The longer the period of uncertainty, the higher the risk of that happening, she said.
Delaware-based Chemours has invested more than $500 million “to develop and commercialize the next generation of high-performance, environmentally-friendly refrigerants,” David Rosen, a spokesman for the company, told the Washington Examiner.
The bill would protect the U.S. “from the illegal dumping of foreign products,” Rosen said. That’s because it sets a nationwide pace for limiting HFCs, including imports from China and elsewhere. Rosen added the bill would “provide various industries the confidence they need to make the investments and conversions necessary to adopt these new products.”
Absent the bill, though, U.S. manufacturers face threats. China is racing to develop next-generation refrigerants, too. While Chemours and other U.S. companies own intellectual property that offers defense in the near-term against Chinese dumping of products, “the clock is ticking on patent protection,” Chemours wrote.
“Delays in policy making reduce the value of these patents and erode the head start U.S. manufacturers currently have,” the company added.
Appliance makers, too, warn investment will ultimately follow policy.
If there is no federal phasedown of HFCs in the U.S. “but Europe and Asia move forward to transition to these refrigerants, Carrier would likely invest in those markets first to meet consumer demand,” the appliance maker wrote. In 2017, President Trump boasted his role in convincing Carrier to abandon plans to shut an Indianapolis factory and move its jobs to Mexico.
“However, should the United States implement a national program and an orderly phase down of HFC refrigerants, Carrier would likely invest in the high-skill, high wage engineering jobs necessary to meet the increased design and testing requirements of a large national phase-down,” the company added.
Nonetheless, despite the overwhelming support from companies that would be predominantly regulated under the bill, the measure has hit an impasse.
Barrasso and a handful of other Republicans are raising objections, particularly that the bill doesn’t prohibit states from setting their own limits on HFCs. Without that protection, states could go faster and farther than federal programs, costing both industry and consumers, they fear.
Barrasso has also outlined concerns the legislation would phase down HFCs too quickly before certain end-use sectors such as aerospace, defense, and automobiles are able to find workable replacements.
In their testimony, those industries “raised serious concerns with the bill and, based on their breadth of comments, did not appear to have been consulted in the legislation’s development,” said Sarah Durdaller, a spokesperson for Barrasso. She pointed to comments from the Aerospace Industries Association, the Alliance for Automotive Innovation, and the Truck and Engine Manufacturers Association, among others, as examples.
Backers of the bill, though, say some of those issues can already be addressed.
The bill allows for 15% of the current stockpile of HFCs to “remain in place in perpetuity” to address applications where there might not be immediate replacements, said Chuck Chaitovitz, vice president of environmental affairs and sustainability for the U.S. Chamber of Commerce, which supports the bill.
Many of the industry sectors that raised concerns, too, said they use less than 1% of the available HFCs in the U.S., meaning there will be plenty for them even with the phasedown, said David Doniger, senior strategic director of the Natural Resources Defense Council’s climate and clean energy program.
Chaitovitz said the Chamber has been talking with many of those groups to address their concerns.
Industry supporters of the bill see an opening for lawmakers to reach a compromise on states’ roles, too. Slater said if the committee set a markup for June or July, it could encourage parties to the table to reach a deal. And if there’s a clear path for the bill, it could even fit in any economic recovery legislation because it would create 33,000 new jobs “at no cost to the taxpayer,” Chaitovitz said.
Even so, the issue could be a much harder needle to thread.
Barrasso has said he won’t move the bill without language precluding states from setting their own limits on HFCs, and the White House has backed that position. Environmental groups and Democratic states have an equally bright line.
“All of the sponsors know that if they were to put a preemption provision in the bill, they would lose the support of the environmental advocates and stir up opposition from the states,” Doniger said. “It doesn’t grease the path to passage by moving in that direction. Instead, it creates new obstacles.”
Carper, too, doesn’t seem willing to reopen the door to negotiations over state preemption. He told the Washington Examiner in a statement that comments the committee received made it “abundantly clear” there’s already widespread support for the bill.
“I remain open to changes that will make the AIM Act stronger — however, I am still not interested in any poison pill policies that would undermine the intent of the legislation,” Carper said.
