The global community is getting stricter on greenhouse gas emissions and tougher rules will have ramifications on many industries, including hospitality.
Earlier this week, in Kigali, Rwanda, more than 170 countries reached a legally binding agreement to contest climate change by curbing the worldwide use of a planet-warming chemicals used in such everyday appliances as air-conditioners and refrigerators.
Unlike the Paris Agreement, the world's first comprehensive climate agreement, drafted last year, the Kigali deal, an amendment to the Montreal Protocol, is more singular in scope: stamp out hydrofluorocarbons, or HFCs, used in air-conditioners and refrigerators. And while the Paris Agreement is voluntary with no binding enforcement, the Kigali deal is mandatory.
Overall, the deal is expected to lead to the reduction of the equivalent of 70 billion tons of carbon dioxide from the atmosphere. President Obama referred to the deal as “an ambitious and far-reaching solution to this looming crisis.”
While the accord is aimed at keeping the Earth healthy, the new mandates will have a trickle-down impact on many industries, including hospitality, that rely on appliances, such as fridges and ACs, to serve guests and keep properties operating.
Hotels have various HVAC and cooling components and changes—the U.S. and EU will freeze the production and consumption of HFCs by 2018, reducing them to about 15 percent of 2012 levels by 2036—are still some time away, but hotels still need to be aware of the changes and that means planning ahead.
"Because HFCs are used in almost all commercial AC systems it will have long-term impact," said Laura Mandala CEO of Mandala Research, a firm that conducts studies for Fortune 500 companies, non-profit organizations, and government agencies. "Alternatives will be more expensive and may require equipment replacement and modification. It is not unreasonable to expect that the costs associated with this will ultimately get reflected in hotels' average daily rate."
Still, Douglas Reinke, CEO and president of Bluon Energy, a developer and manufacturer of new-generation HVAC refrigerants, said there is no need to panic. "A solution is several years out," he said. Beyond that, he is excited at the prospect of what the Kingali agreement means for innovation in the space.
“The new HFC refrigerant mandates are going to drive exciting innovation throughout the HVAC and refrigeration industries," Reinke continued. "Right now there are no HVAC options other than HFCs and in refrigeration there are HFOs (hydrofluoroolefins, which can be used as refrigerants with low global-warming potential) and natural refrigerants."
A momentous achievement seven years in the making. The Kigali deal marks a major victory for our planet. https://t.co/gAEzTVT06G— John Podesta (@johnpodesta) October 15, 2016
Reinke explained some of the science: "HFOs actually contain HFCs, are flammable and at this time less efficient," he said. "There are also other natural refrigerants in the refrigeration space, such as ammonia and CO2, but they present human risks."
Specific to hotels, Reinke explained two options for hoteliers, over the next five to 15 years. With both, it comes down to cost. "You either go with a replacement refrigerant that is energy efficient with a low global-warming potential that works in your existing HVAC-R infrastructure, or invest in expensive new R-410A HVAC equipment that is positioned for de-listing by the EPA and has a much higher GWP."
His advice: "Hoteliers’ plans need to be focused on a solution that will sustain your current equipment and is energy efficient, which in turn produces the least amount of CO2 until better energy and environmental options are developed."
Suppliers to the hospitality industry are applauding the Kigali deal. "The recent amendment of the Montreal Protocol on the use of HFCs highlights a growing trend in our industry and across many industries: the need to innovate and continue to develop more environmentally sustainable technologies," said Kevin McNamara, SVP & general manager of LG Electronics USA's Air Conditioning Technologies Business. "In the coming years, it will be critical that the regulatory requirements for HFC phase-down and approval of increasingly environmentally friendly refrigerant alternatives are developed in a manner that protects the environment and innovation. As we look toward a greener future, we will continue to identify new, sustainable solutions while maintaining the quality and affordability that our customers expect from our products."
According to The Wall Street Journal, various other manufacturers are already in the process of rolling out new products that meet new standards. Like Chemours Co., a publicly traded chemicals company spun off from DuPont Co. last year, which said it was "introducing a new line of gases to help replace HFCs for certain industrial-scale refrigeration and air-cooling systems."