Kigali Amendment Would Raise Air Conditioning Costs and Undercut American Competitiveness

Air conditioning season will soon be here, and it may prove to be the most expensive one in years thanks to a new federal program rationing the refrigerants used in many systems. But rather than exploring potential reforms to reduce the cost of staying cool, the Senate is moving toward ratification of a United Nations treaty called the Kigali Amendment that could make things worse.

The federal restrictions on hydrofluorocarbons (HFCs)—dubbed the American Innovation and Manufacturing (AIM) Act—were added to a big spending bill and enacted during the lame duck session of Congress in December 2020. This widely used class of refrigerants was targeted because they are (what else?) contributors to climate change. The Environmental Protection Agency (EPA) set up the system of rationing HFCs that took effect on January 1, 2022.

Wholesale prices for HFCs have already quadrupled, including for HFC-410a, which is used in tens of millions of residential central air conditioners. In a few months, we’ll know for certain the impact on repair costs, but it’s a good bet that replacing refrigerant lost from a leak will be $100 to $200 more than in past years. A different HFC is used in vehicle air conditioners has also increased in price, as have ones used in the air conditioning and refrigeration systems relied upon by millions of businesses.

It will get worse, as the EPA’s quotas for HFC ratchet down significantly in 2024. And there’s no escaping higher repair costs by purchasing new equipment designed to operate with substitutes for HFCs; their cost is also high.

Joining environmental activists in supporting these domestic and international measures are a long list of advantage-seeking air conditioning and refrigeration companies that hope to skew the market towards their more expensive products. They are led by Honeywell and Chemours, both of which have patented a suite of substitute refrigerants that could never compete on a level playing field with HFCs and cost considerably more.

And now, the Senate Foreign Relations Committee is holding an April 6 hearing

on a United Nations treaty, called the Kigali Amendment, that would add a layer of international HFC limits on top of the domestic ones.

As it is, Congress can revisit its ill-advised federal HFC measures in light of the coming burden on homeowners, car owners, and businesses, and consider revisions to cushion the blow. But any chance of reform would be lost for good should the Senate cede control over the issue to the United Nations by ratifying the Kigali Amendment.

Beyond consumer impacts, Kigali Amendment ratification would unfairly saddle American manufacturers that rely on HFCs. Notably, China is classified as a developing nation

under the treaty and thus is subject to considerably more lenient provisions. Thus, Chinese manufacturers would be able to use cheap and abundant HFCs in the refrigeration systems needed in many industrial processes and as etching agents in semiconductor manufacturing, and do so long after high HFC prices and dwindling supplies would force their American competitors to make the costly switch to substitutes.

And for what? According to both the National Oceanic and Atmospheric Administration and Environmental Protection Agency, the percentage contribution of HFCs to global warming is in the low single digits. In other words, the AIM Act and now the Kigali Amendment offer a lot of economic pain for negligible environmental gain.