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‘We’ve seen some crazy things in terms of counterfeit refrigerants’

Michael Jorde and Prakash Chablani, International Marketing Manager of Harp International and Managing Director of Unigulf Development, respectively, discuss the reasons behind the continued prevalence of counterfeiting in the refrigerant sector, the safety hazards it poses to the end-users and the different measures the public and private sectors can take to curb the practice.

| | Jun 19, 2016 | 10:18 am
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Interview by B Surendar, Editor, Climate Control Middle East, and Fatima de la Cerna, Assistant Editor, Climate Control Middle East

What initiatives is Harp taking against counterfeit refrigerants? And how big a problem is counterfeiting?

Michael Jorde

Michael Jorde, International Marketing Manager of Harp International

Michael Jorde: Counterfeit refrigerants are a big problem in our industry. In 2011, there were deaths attributed to the contamination of refrigerated containers or reefers, and that pushed counterfeiting of refrigerants into the global spotlight and changed the landscape of the industry.

When the issue was investigated, it was discovered that, globally, around 10-15% of all refrigerated containers or reefers were contaminated with a product called R-40, which is hazardous. What this product basically does is attack the aluminium in the refrigeration system, which can cause explosions.

Like I said, that incident really brought counterfeit refrigerants into focus – an important development for brands like Harp, because our priority has always been the quality and integrity of the product. We take pride in the fact that we fill our own products. A lot of our competitors don’t. Instead, what they do is have a third party fill the product on their behalf. At Harp, however, we religiously analyse the product at every single stage – before filling, during filling, at batch level, etc. – to ensure quality all the way through.

We’ve seen some crazy things in terms of counterfeit refrigerants. We’ve seen not only counterfeit gas within the cylinders but also cylinders that are dangerous and not fit for the purpose being used. We’ve seen cylinders with fake pressure-relief devices inside them. We’ve seen R-134A cans flying across warehouses as a result of the pressure building up owing to high-ambient temperatures. If there’s high-ambient temperature and the pressure-release valve device is only cosmetic and does not perform any function, you can have explosions.

It’s a big and important issue across the industry, and it seems to have gotten worse in the last few years, mainly because there’s a lot of money to be made in substituting a relatively high-priced product with a cheaper alternative. Often, the cheaper alternative will perform the same functions and will have the potential to be used as a refrigerant, but these replacements are usually flammable. So what you have is a flammable product being used in a system that is not designed to handle flammable refrigerants. Needless to say, this can cause all kinds of problems for the user.

What kind of response are you getting from the market in the UAE? We ask, because the UAE is often described as a very price-driven market. The price is reportedly king, and one of the reasons behind the prevalence of counterfeiting – not only of refrigerants but also of a variety of products.

Jorde: The end-users will have to decide. But we have noticed that our customers in the Middle East, when they try to substitute our products with others, realise that alternative products are not desirable or have problems and, could, maybe even damage their reputation. Generally, those customers end up going back to using our products.

Prakash Chablani: When you want to bring in controls or regulations of any nature, all stakeholders must be responsible. Of course, you have to first make it clear who the stakeholders are; only then can they be given the responsibility.

Around 10-15% of all refrigerated containers or reefers were contaminated with a product called R-40, which is hazardous

Take China, for instance. Its export of HCFCs is now very well-regulated. You can’t just take a shipment of HCFCs out of China. There have been different legal actions in the country, including jail terms. Then we have the local scene here. In the past, anybody and everybody could import, but then came a quota system. Of course, we have to give credit to the authorities. They are changing with the times. They now have much better controls on imports, not just at the federal level through the UAE Ministry of Climate Change and Environment but at the municipality levels, as well. And I heard recently that they’re regulating imports even at the customs level, with everything under this class open to inspection.

I know in some countries, customs have equipment that can test refrigerants. You might, for example, mark your product as R-134A but inside you have R-22; so they’ve got equipment to test that. They could ask you to open a container as part of random testing.

And so control levels are improving. It is important to remember, however, that we have an open market. The government will never, for instance, take a singular action for or against a brand. But to comply with global regulations over HCFCs or ozone-depleting substances, I think the government should implement an ad valorem tax, because it’s all commercial. In the end, it’s all commercial, so just make them more expensive.

So price them out?

Chablani: Yes, price HCFCs out.

Today, we don’t look at ODP only but also GWP. And the way Europe is doing it is fantastic, because they have an index to go after. They won’t tell you what is right or not right. And everybody – all stakeholders – have to work towards that. It will, of course, take time for that to be adopted here; but for now, make them commercially unviable.

I am an importer. I have a quota and I think it is fantastic, because we are also one of the largest importers of alternative refrigerants. We want more alternative products here, because they are the future.

What do you think is the long-term alternative? R-410A?

Prakash Chablani, Managing Director of Unigulf Development

Chablani: There are plenty of options, but this has to be driven by OEMs. They invest a lot in research and development with the manufacturers. They are the eventual solution-providers. Refrigerant is just a medium, so they have to drive that, while the government looks at the GWP index. That’s what’s happening in Europe.

Jorde: That is what’s happening in Europe. A quota has been fixed – in GWP terms, not in absolute kilo terms – so that each importer is allocated a quota. They are free to choose whichever mix of refrigerants based on the overall GWP allowance, but the idea has helped authorities to put the focus on the industry, while trying to dictate which solutions are better. They say, ‘This is your total allowance in terms of GWP. Pick and choose whichever products you want to use.’

And there’s a periodic phase-down, until we’re left with only a fraction of the original quota. So the industry has to come up with inventive ways to reduce GWP. For instance, two high-value products are R-507 and R-404A. R-404A is the most popular, so that’s the focus of the industry’s efforts to find substitutes. A lot of work has been done on alternatives to R-404A.

In the past few years, the industry has seen a number of refrigerant-related conferences attended by OEMs, refrigerant manufacturers and even regulators; yet, no clear picture has emerged. We’ve, in fact, spoken with some stakeholders who have expressed frustration, saying that conferences turn out to be nothing but lobbying sessions, with participants pushing their own agenda and interests.

Chablani: In a democratic situation, you cannot have clarity at first instance. You have to go through this; this is part of the evolution.

With any phaseout, it’s always government-driven, either via incentives, taxes or by an actual ban…. It’s very difficult to pursue something that is industry-driven

In the last – I think – 15 years, we’ve gone through three generations. The important thing here is that there has been such activity levels that we’ve gone through three generations of refrigerants. R-22 has been in existence for 50-plus years. The situation has even changed conceptually. There’s no more ODP; it’s now GWP. And if you really think about it, that’s right; that’s the way it should be. Why should one alternative be the solution? This should be all based on research and development. Huge money goes into OEMs, and at the end of the day, the OEMs are the biggest stakeholders in this. No medium, no alternative.

With the deadline of the phase-out approaching, do you see the market taking proactive measures? Do you see, for example, end-users going for equipment that would move away from R-22?

Jorde: With any phase-out, it’s always government-driven, either via incentives, taxes or by an actual ban. That is typically how it works in the industry, so you have to have regulations or a government system in place to promote the phase-down or phase-out. It’s very difficult to pursue something that is industry-driven.

If you look at the other nations or trading blocs that have phased out R-22… Europe phased out R-22 a while ago; the US is a lot farther down the path; the UAE, by international standards, is a very advanced economy, but in terms of the HCFC phase-out, it seems to be behind other nations.

I think, to answer your question, you’ll definitely need government intervention. Europe has the HCFC quota, and people are looking into alternatives. The focus is very much on reducing the GWP, but that never would have happened without government intervention.

What is Harp doing in terms of reclaiming refrigerants?

Jorde: In the UK, we have – and have had for many years – a successful reclaim operation. Generally, through our network in the UK, we only use refillable cylinders in Europe. No disposables to speak of. When refillable cylinders are sent out to customers, we receive waste refrigerant back from the distribution network in the UK. And we have a reclaim plant. The reclaim plant can take contaminated refrigerants and bring them back to well within the required specifications.

So you reclaim, clean and pump it back?

Jorde: We reclaim, clean, analyse, reanalyse, make sure that it’s within the AHRI 700 specification requirements, and then we pump it back into the storage tanks.

Waste contaminants that have been recovered go to incineration. We incinerate them, and we actually incentivise the customer to return the waste refrigerant. They’re given a credit for the returns, and we recover and bring the refrigerant back to specification and back in circulation. We’ve invested a lot of money in this technology and improved it several times and perfected it.

There have been accusations flying here that the Middle East, the GCC region in particular, is being used as a dumping ground for products that no longer meet the stringent regulations coming into the European market. What kind of standards or values have you adopted to make sure that what you supply to Europe is the same as what you supply here?

Jorde: The products that we supply to the UAE or anywhere in the Middle East are no different from the products that we supply in Europe. They’re 100% exactly the same. The quality standards that we apply as a company apply everywhere that we sell. Our refrigerants are all guaranteed to meet Harp specifications and the Harp product guarantee, and they actually come from the same tanks. The only difference is the fact that we’re allowed to ship in disposable cylinders here but not in Europe. The package is different, but the product itself is exactly the same.

Chablani: In fact, the same Harp products that come here go to the United States.

Jorde: Some companies may be trying to dump substandard products here in the region. That’s true. Other players in the market have certain higher-priced products that go to certain regions, and then they have lower-priced products with different cylinders or lower-quality cylinders.

As I mentioned earlier, one of our benefits as a company is that we actually fill our own products. Some of our competitors, they buy cylinders in China that are sold as generic products. Those companies selling the cylinders will allow you to put your own branding on the cylinder and sell it with a European address. So the reality is, it’s a low-priced cylinder but with a different label, maybe a nicer box, a more attractive design, but it is the same generic product. And people buy those products under the assumption that they have passed all European standards, but they haven’t. I mean, the people selling them can’t guarantee for sure what’s inside, because they didn’t fill them.

Chablani: It may seem minor, but it takes every drop to make the quality thing work. The cylinders should be DOT 39 cylinders, because alternative cylinders could just add impurities to even the best gas. There are no controls around them.

DOT 39 is the standard. It’s available everywhere, but if you talk to the Chinese, for example, they have a different price. When you have a different price, it means you are diluting; and if you are diluting, you are not maintaining the integrity of the product that’s in there. DOT 39, if I’m not mistaken, even has testing done on the cylinder for the purity level.

Jorde: Yes, there is testing. It’s a US standard, with DOT being the Department of Transport. It was originally a road safety classification, but now, the cylinders that we use are all DOT- 39-approved. Another problem is that you can get fake cylinders that have the DOT 39 label and the manufacturing code on the cylinders themselves.

Chablani: You should try opening a DOT 39 cylinder once. Empty it out and cut it up. And do the same thing with a Chinese cylinder, and you’d see rust, if you want to call it that. Doesn’t that add to the impurity?

Jorde: And it’s not just the rust – the thickness is inconsistent. You might get the correct thickness in some parts, but the walls may vary. With a high-pressure gas like R-410A, for instance, its cylinder is heavier than that of R-134A because of the thickness of the steel. It has to be thicker to cope with the higher pressure. And one of the main weaknesses of a cylinder is the seam. The seams are welded together, but they often leak in counterfeit cylinders. If you’ve got high-pressure gas in there, you’ll have a problem.


 


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