For decades, air conditioning and refrigeration manufacturers used chlorofluorocarbons in their products, contributing to the depletion of the ozone layer. Despite appeals from scientists, many companies resisted change until increased consumer concern translated into slumping sales (Tabuchi and Hakim). In 1987, the Montreal Protocol agreement was created to phase out these chemicals, and the result was a shift to hydrofluorocarbons. HFCs are greenhouse gases with 1,000 times the heat-trapping potency of carbon dioxide; one study estimated that the use of HFCs alone could warm the earth by half a degrees Celsius by the end of the century (Barry and Davenport). In October of this year, negotiators from more than 170 countries gathered in Kigali, Rwanda to amend the Montreal Protocol to limit the emission of HFCs used in the air conditioning and refrigeration industry. Experts anticipate that eliminating HFCs could prevent the release of 100 billion tonnes of CO2 by 2050 (King). This time around, the agreement was in part made possible by private sector companies developing more environmentally-friendly alternatives to HFCs and actively lobbying for regulation.
Daiken Industries is a Japanese air-conditioning and refrigerant manufacturing company. Daiken has differentiated itself by introducing state-of-the-art technologies to the market that address environmental and energy issues and by providing these products to emerging economies (Daiken Global). Following the Kigali talks, the Obama Administration recognized Daiken and several other private sector businesses for their continued commitment to reducing harmful emissions.
On the one hand, Daiken stands to benefit from the effects of climate change; the increase in global temperatures are expected to increase demand for air-conditioners, with the largest increases expected in emerging markets such as China, India and countries in Latin America (Isaac). If the IPCC’s most recent estimates hold true and no additional efforts are taken to reduce climate change, the planet could experience an increase in mean surface temperature of 3.7 to 7.8 degrees Celsius by 2100 (Henderson, Reinart, Dekhtyar, and Migdal). One study found that in South Asia, energy demand for residential air conditioning could increase by nearly 50% due to climate change alone (Isaac). In warmer tropical regions – where much of the world’s population will be concentrated – increased cooling demand would result in increased energy prices for consumers and higher levels of HFC released into the atmosphere.
Mitigating the effects of climate change is not just an environmental issue resulting from social and regulatory pressures, but a strategic issue driven by market pressures and technological innovation. Daiken is incentivized to continue to innovate on their products in order to increase efficiency and thus reduce energy costs for consumers so that their business remains competitive. The phase-out of HFCs will no doubt be beneficial to Daiken as well as American chemical companies like Dow and Honeywell, which have been researching and developing environmentally-friendly replacement chemicals (Tabuchi and Hakim).
Daiken is preparing to meet the increased demand for air-conditioners while taking several steps to innovate on their products in order to address the effects of climate change. Daiken already offers environmentally-friendly products like HFC-32 (with just one-third the global warming potential of conventional HFC refrigerant) and has developed a new heating system that reduces CO2 emissions to less than 50% of those from conventional combustion-type heating (Daiken Global). Daiken continues to conduct research aimed at achieving practical use of next-generation refrigerants that contribute less to global warming. Daiken is also designing and developing products that prevent leakage and make it easy to recover refrigerant, as well as new ways to collect refrigerant during the manufacturing stage and product repair so that the chemicals are not released into the atmosphere. Additionally, Daiken is planning to open a global R&D base for creating new social value in the fields of air environment and energy.
Daiken should provide local governments, air conditioner manufacturers, and dealer engineers in developing markets with the knowledge and techniques needed to adopt sustainable technologies. It is imperative that Daiken grows adoption of their eco-friendly products in emerging markets now before the demand for air-conditioners increases substantially as a result of rising temperatures. Otherwise, consumers in developing countries will purchase less sustainable air-conditioners as opposed to leapfrogging – the ideal scenario is for these consumers to not purchase products with conventional HFC refrigerants and instead, skip a step by purchasing the newer, eco-friendly alternatives. Consumers in these developing countries are typically very price-sensitive, so Daiken will need to make sure to keep the prices affordable for these consumers in order to drive large-scale adoption. Lastly, Daiken can reduce the effects of climate change by training more technicians in emerging markets to reduce refrigerant leaks during installation and repair, which helps limit emissions of greenhouse gases.
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