US startup aims to turn aircon units into carbon credits
Quantum Commodity Intelligence – US startup Recoolit is working on a project in Indonesia that aims to capture hydrofluorocarbon (HFC) refrigerant gas from old air conditioning units and generate carbon credits in the process, its co-founder told Quantum in an interview.
The company estimates that industrial gas capture represents a $1 billion per year opportunity in Indonesia alone, with significant potential in other dense developing nations such as China and India.
Countries have phased out most ozone-damaging gases as part of the Montreal Protocol, but their replacements, the HFCs, are potent greenhouse gases.
An amendment to the protocol came into force in 2019, requiring countries to cut HFC use by 80% by 2050, with developing countries given a longer timeframe to phase them out than developed nations. Gas capture and treatment are not addressed, thus leaving a role for carbon markets.
A different type of HFC project was a major part of the UN's Clean Development Mechanism, the main offset market for countries with targets under the 1997 Kyoto Protocol that capped emissions of most OECD countries.
However, those projects, which focused on industrial byproducts being released during production, became widely viewed as non-additional, eventually causing the European Union to ban imports into its EU Emissions Trading Scheme.
Ning Jeng, Recoolit's co-founder, says the company's carbon credits are different, having been generated from disused air conditioning units and other types of units collected by the company in Indonesia, unlike the industrial scale projects funded under the CDM.
The company has set up five depots across big cities and partnered with a cement plant that is able to destroy the gases, says Jeng.
Recoolit has also created an online tool that is able to confirm that the units have been disposed of safely, using photo documentation and GPS data points throughout the entire process.
The startup chose Indonesia because of market size, the fast-growing demand for cooling, and because HFCs are typically just vented into the atmosphere at the end of an air conditioning unit's life, causing significant emissions.
The entrepreneur argues that the credits generated by Recoolit's efforts are highly additional and permanent: "Once destroyed, it's done. It's not going to come back. We can scale up the volume, and there is no risk of project leakage because collecting refrigerants doesn't cause someone else to emit more."
"We have as much additionality as direct air capture, full traceability on where the gas is coming from, and there's basically zero technology risk because it's all been done before. And then there's also some side co-benefits: economic development in emerging markets. When you look across the board of all these different variables, we think that we actually stand out among other credit types," Jeng added.
Air conditioning usage is set to grow significantly in developing nations over the next few years, helped by rising populations and a warming climate.
The company said it has cooperated with the Yale Carbon Containment Lab on the methodology development and to submit that methodology to a major registry.
American Carbon Registry (ACR) already operates several methodologies related to HFCs and other ozone-depleting substances (ODS), and says the market for carbon credits from those technologies is bound to grow further with higher carbon prices, despite some hurdles.
"Currently the carbon market for refrigerants faces several solvable challenges. These include inadequate capacity of infrastructure and associated trained workforce to help reclaim and destroy high-GWP pollutants. There are high capital costs to build the facilities and train staff necessary to undertake this technical work," said ACR in a recent note.
"Additionally, there is a lack of awareness among buyers of carbon credits that these types of projects exist. To be frank, many buyers, when they think of carbon markets, think about renewable energy or forestry projects."
