Cold air heating Earth: Honeywell and Chemours patents are hindering India’s transition to climate-friendly refrigerants
After a 20-month fight led by India and South Africa, the World Trade Organization (WTO) agreed recently to waive patents on COVID-19 vaccines for developing countries. Though the waiver has been criticized as too little, too late—it comes more than 2 years into the pandemic—we think the WTO deserves credit. Big, multinational companies just do not often set aside patents for the benefit of low- and middle-income countries, even in the face of compelling humanitarian interest.
Allow us then to suggest another case where patents should be set aside, where the direct beneficiaries are in developing countries and the stakes are also high, if measured on a longer time scale: Honeywell and Chemours patents on R1234yf refrigerant. This product radically reduces the climate impacts of air conditioning, but it’s not being used much in motor vehicles in India or in other large (China) or emerging (Southeast Asia) auto markets because of licensing costs imposed by those patents.
R1234yf is a hydrofluorocarbon with a global warming potential (GWP) of 1, compared to a GWP of 1,300 for R134a, the refrigerant common in India’s vehicles today. Back-of-the-envelope calculations suggest India’s mobile air conditioning (MAC) sector could eliminate around 0.4 million tonnes of CO2 equivalent each year by switching to R1234yf. (We get this by considering 3 million new passenger cars, the 1,300 GWP of R134a, and 0.1 kilograms, the average amount of refrigerant leaked into the atmosphere each year.) This would help to avoid up to 0.5 °C of global temperature rise by the year 2100 while continuing to protect the ozone layer. But using R1234yf in a vehicle in India costs nearly 10 times more than using R134a, and in a market where the average car retails for less than US$10,000, this is unlikely to happen soon without relief on the cost of the refrigerant, some regulations incentivizing its use, or some combination of the two.
The first applications for patents on R1234yf were filed in late 2002, and a patent typically gives the owner the right to stop others from manufacturing or selling the product for 20 years from the filing date. Indeed, even if local manufacturers in India produce R1234yf refrigerant using their own unique process, a significant challenge for Indian manufacturers right now is Honeywell’s application patent, which restricts them from using R1234yf in MAC systems unless they purchase a license. Thus, Indian manufacturers can’t utilize R1234yf without risk of significantly increasing the upfront cost of their vehicles.
Although vehicles sold in the United States, the European Union, and Japan have all mostly shifted to R1234yf, these are less price sensitive markets than India and regulations either required the change and/or incentivized the switch. India can support climate-friendly refrigerants with changes to its vehicle regulations, and we’ll publish a paper that explores some of the most advantageous ways to do that soon. But there’s more to this than local changes, because most patents on R1234yf have already been invalidated in Europe following lengthy legal battles. Even still, Honeywell continues to maintain similar patents in India on a broad range of percentage mix of R1234yf, with claims varying from 5% to 99% by weight.
We said above that patents are typically granted for 20 years, and 20 years from 2002 is 2022, so just this year. Won’t time take care of this? Unfortunately not. Recent work from the Institute for Governance & Sustainable Development reviewed R1234yf patents in various regions and showed that some in China aren’t expected to expire until 2030. In India, some are expected to last to 2033. There are even applications for patents that would last longer than that.
What about the Kigali Amendment to the Montreal Protocol, which India signed? Well, pursuant to that India has to freeze the production and consumption of R134a in 2028; use in that year becomes the baseline and then phase-down of use needs to begin 5 years later. China has to begin phasing down earlier than that, in 2024, and is already dealing with patent-related court actions, including one at the end of last year by Honeywell.
R1234yf is an all-around great product. Not only does it have very low GWP, it’s also cost-effective in reducing CO2 emissions during real-world driving. However, as shown in the figure below, its cost to vehicle manufacturers, after including the current license fee, is higher than the technologies that qualify for off-cycle credits in India’s fuel consumption standards. India’s regulations can adjust to capture the many benefits of R1234yf, but the high retail cost for the car that would result would still be an obstacle to customers.
A high retail cost also creates risk at the time of maintenance and servicing of MAC systems. As R1234yf is a drop-in replacement for R134a, even if it were used by the manufacturer for the first charge, a continued high retail cost for R1234yf might deter customers from recharging with it. They might instead refill with R134a, with all the climate impacts that would entail. It’s important because a customer refills four to five times during the lifetime of the vehicle.
While the cost of R1234yf remains high, it will likely be used only on premium vehicle models in India. The process of challenging the patents has not yet started in India, but does it have to? What if the legal barriers to the use of R1234yf were removed by granting a free license? In that case, India and the world could soon benefit from a more rapid transition to low-GWP MAC refrigerants.
Like a lot of corporations, Honeywell and Chemours have environmental and sustainability goals with a lot of fine words. Here’s a chance to directly and immediately match fine words with real action. Changing course and giving up the patents would mean Honeywell and Chemours would make less profit from just one of their many business lines around the world, that’s true. But they’ve enjoyed years of premium prices already, and less profit doesn’t necessarily mean zero profit. It might just mean less.
The aforementioned COVID-19 vaccine patent waiver is a positive step forward and can set a precedent for strategies to tackle the global issue of climate change. Keeping the price of R1234yf refrigerant high is speeding up a global warming process that so many are working so hard and sacrificing so much to mitigate. Isn’t it worth the price to these huge companies, after years of enjoying the fruits of patent exclusivity? Better still, waiving the patent on R1234yf would help make the planet more liveable for all.