The refrigerants inside cooling appliances, air conditioners and heat pumps are a climate time bomb. At present, the inventory of refrigerants is estimated at between 13 Gt to 24 Gt CO2-eq., with the global use of refrigerants growing at about 8 percent per year. 

The real problem? Most refrigerants are powerful greenhouse gases. As it stands, annual emissions from refrigerants exceed 1.5 Gt CO2-eq. ­– equivalent to the annual emissions of 441 coal-fired power plants. That’s where life-cycle refrigerant management (LRM) comes in. The aim of LRM is to curb refrigerant emissions by preventing leaks and recovering refrigerants from equipment after servicing or when equipment is retired, so they can be reused where possible or destroyed with minimal environmental damage.

However, our study reveals that at least 75 percent of refrigerants are not being recovered properly but are, instead, released untreated into the atmosphere (so-called “venting”). Even Japan and Norway, two countries with a tradition of managing refrigerants, have an estimated recovery rate of only around 45 percent and 30 percent respectively. 

Taking stock of the refrigerant issue

We wanted to understand the reasons for the low recovery rates of used refrigerants. Our study focused on Northern Europe, a region bound by European Union (EU) regulation and boasting an infrastructure for the collection, reuse and destruction of used refrigerants. It turned out to be a multi-faceted issue.

Not a technical problem

The technical aspects of collecting, reusing and destroying used refrigerants are well understood and pose no particular challenge. Used refrigerants can be reclaimed to bring them back to the same quality as new refrigerants; or recycled, whereby they are reused without the need to meet a specific standard.

Lack of information on ecosystem KPIs
Given the significant environmental impact of refrigerants, we had expected information on the performance of the refrigerant ecosystem to be available. Unfortunately, that was not the case. Most countries struggle to measure ecosystem KPIs, such as the annual volumes of used refrigerants and recovery rates. One reason is that refrigerants are invisible (when in gaseous form) and odourless. 

Ambitious legislation with limited enforcement
The EU has put in place legislations on refrigerants since 2006. They include prohibiting the release of untreated refrigerants into the atmosphere and mandating users to recover used refrigerants to be reused or disposed in an environmentally sound way, among others. 

The legislation also includes a phase-down schedule and quota allocation system, which controls and ultimately bans the production and consumption of new refrigerants with the largest greenhouse impact. By design, the phase-down – which is in line with the Kigali Amendment to the Montreal Protocol – limits supply and increases prices of these refrigerants, which stimulates reuse in the form of recycled or reclaimed refrigerants. 

Built on top of these legislations, several EU countries have implemented additional policy measures. For example, Norway and Denmark have a tax-and-refund system for refrigerants with a high greenhouse impact. Denmark also set up an F-gas deposit-refund scheme (“KMO system”) in 1991 with the Danish Association of Refrigerant Installers.

However, in practice, enforcement is difficult for most governments due to the lack of transparency, the complexity of the ecosystem and limited resources. Moreover, an unfortunate side effect of limiting the availability of new refrigerants is a rise in the illegal trade of refrigerants. Many actors in the refrigerant ecosystem whom we interviewed supported stricter enforcement.

What drives this complex ecosystem

Refrigerants move through a complex ecosystem that includes refrigerant producers such as Honeywell and Arkema, equipment manufacturers like Daikin, wholesalers and distributors, service companies that install and maintain equipment and refrigerants, equipment end users, reclamation companies and companies that destroy refrigerants. With some exceptions, the behaviour of these actors is shaped by the economics of time and money. 

Upstream of the ecosystem, refrigerant producers and equipment manufacturers generally have limited interest in LRM, possibly because they don’t see it as their responsibility. Daikin is an exception. Since 2019, the Japanese air-conditioning conglomerate has been reclaiming used refrigerants from customers and its installer network to be put into new products, saving 400 tons of new refrigerant per year. This is made possible with the necessary infrastructure and partners: its reclamation facility and destruction plant in Germany, and its collaboration with A-Gas, a leading global refrigerant reclaimer. 

At the middle of the ecosystem are the equipment users and service companies. Users are mostly disinterested in LRM. After all, refrigerants make up a tiny fraction of the total cost of equipment ownership, and there is limited enforcement to ensure that they adhere to the regulations. An estimated 54 percent of equipment containing refrigerants isn’t recovered through the proper channels, but instead, ends up elsewhere, such as the metal scrap chain (accounting for an estimated 14 percent of the used equipment). Remarkably, the recovery rate for companies is much lower than for households. As households and businesses use more air conditioners and heat pumps, this waste stream continues to grow.

Thankfully, large supermarkets are more aware, and understandably so, since refrigerant emissions account for around 50 percent of their scope 1 and 2 emissions. Moreover, the sector has a strong business case to support their actions. Studies indicate that investing in natural refrigerant systems generates attractive financial returns, with payback periods of 4 to 10 years (vs. an average system lifespan of 15 years). An example is Germany-based food wholesaler Metro AG, which has pledged to phase out 90 percent of synthetic refrigerants across its global operations by 2030, aiming for a complete phase-out by 2040. 

Service companies play a key role in handling used refrigerants from servicing and discarded equipment. Of these, the smaller ones tend to perceive LRM as a cumbersome activity that takes time without sufficient compensation, requires equipment that they may not have, and doesn’t bring economic benefits. In contrast, larger service companies are generally more interested in LRM – thanks to stronger economic drivers. 

Economics meets innovation

The economics of reclamation and recycling drives much of the flows of used refrigerants from larger refrigerant users, via service companies, to reclamation companies, and back into the system. As legislations continue to limit the availability of new refrigerants, pushing up refrigerant prices, reclamation and recycling is set to become more profitable.

Take Finland-based Eco Scandic, which specialises in refrigerant life-cycle solutions and has been collaborating with Daikin and automotive recyclers in Sweden. Founded in 2015, it tripled its revenue from €0.8 million in 2022 to €2.5 million in 2024. Profit margins grew from 7 percent in 2022 to 28 percent in 2024. 

To improve its access to used refrigerants, Eco Scandic offers free certified recovery cylinders to service technicians, collects the used refrigerant at no costs, and compensates these technicians based on the resale value. The company recently launched “refrigerant-as-a-service”, where customers pay a flat annual fee for a comprehensive package of refrigerant life-cycle services.

While reclamation and recycling are increasing, there is an upper limit to their growth. This is by virtue of the fact that not all refrigerants can be reclaimed or recycled in a profitable way and there is simply no demand for banned refrigerants.

The benefits of more active businesses

As virtually all businesses use refrigerants in one way or another, they can help change the ecosystem by adopting the basic principles of LRM: creating an inventory of refrigerants in their own value chain, selecting natural refrigerants where possible, reducing leaks, and ensuring proper refrigerant recovery, reuse and disposal. 

Moreover, a growing demand for refrigerants amid the declining availability of new refrigerants and higher prices will open opportunities for profitable business ventures such as refrigerant-as-a-service and cooling-as-a-service. A combination of new business models and effective government interventions will be critical in mitigating the environmental impact of the refrigerant ecosystem.