What impact is environmental legislation having on your business?
If you have R404A, all systems with more than 10KG will fall under the new F-Gas legislation. For other parts of the GWP level, in transport, we were let off on this one, because most of the systems in the field today are below 10KG of refrigerant.
In a sense, the transport industry was not impacted by the GWP level of HFC. But, having said that, F-Gas is not only looking at the GWP level, it is also looking at how you handle HFC. So, if you service a system, you need to register what you are recovering from the system, and you need to register the new charge you put in the system. There is a full aspect on the service side and our Thermo King dealers will need to register all of their HFC movement. In addition, they will have to perform a yearly leak check on all systems.
We are impacted for part of the F-Gas but not for the time being (I am sure this will change), but not on the GWP level of the F-Gas. Having said that, at Thermo King and Ingersoll Rand we have our own commitment to reduce our greenhouse gas emissions, which includes the efficiency of the system, for our products by 50% by 2020.
We are also looking at how we produce our products. We aim to reduce our greenhouse gas emissions by 35% by 2020.
That must be affecting you think about your products and your service, because that is a big commitment?
This refrigerant has a GWP of 1940, which means we are already cutting our potential emissions in half. We have introduced R452A on all our trailer products for the time being. Our truck range will also have use this new refrigerant.
We have also looked at how we can reduce the charge within our systems. By implementing new technologies, such as micro-channels, even in transport refrigeration systems we have been able to reduce the charge in our systems by, on average, 30%.
If you add the 30% and the 50%, we have an average GWP reduction of 69%. We are well on track to deliver what the EU is expecting from the industry in 2030.
That's not the end of the story and we continue to work on developments to reduce our GWP. But, we always need to look at the overall impact.
The industry is challenging and we need to create solutions that not only benefit the environment, but they are efficient and affordable for our customers.
In the context of the industry, margins are always tight so it must be a difficult balance to meet for your customers?
Three years ago, we showed a CO2 closed loop system. CO2 has a GWP of one, and other natural gases have very low GWP. But, all these natural refrigerant gases required a huge change in the refrigeration system; they had a big change on the efficiency. To make up for the efficiency loss of adding CO2 you need to add complexity to the system.
I am not saying that it adds a lot in cost but it destroys a lot of the efficiency because you need more power to run the new system. You need to find a balance.
We need to keep in mind the overall emission of our system. R452A and micro-channel enabled us to have an immediate impact on our emissions.
But, R452A is a refrigerant which is useful for upgrading existing units. Customers can bring their existing R404A units to one of our dealers and they could upgrade it to the new refrigerant.
The physical challenge of one your products on a trailer is moving around. Your equipment must have to be robust to put up with the conditions?
On average, you can see trailers running after nine years, or some of our customers are pushing to 12 years.
They have to put up with a lot of different conditions and that is a big difference between static and mobile refrigeration units. Movement, yes, but our systems could run in Kuwait or Sweden.
And you could maybe tailor the offer for a customer who is not going to see temperatures of 45 degrees in Sweden. But, their units could travel from there to Spain or Morocco.
We put very high standards on our ambient conditions and the rules for our products ensure they run from minus 30 degrees to plus 55 degrees.
That's pretty challenging to test against and provide a solution for?
Another difference between transport and static is that most of the time a static application is that you know where it will be installed. And, secondly, you know what the set point will be.
It's static not only on where you know it is installed, and whether it is a deep frozen or fresh warehouse. Our customers don't just transport fresh produce, for example. They have to find what they can to transport and that might be frozen today and tomorrow it is fresh.
In that case, our customers have a set point that goes from +18 degrees to -30 degrees. That's another challenge.
Imagine the challenge. In transport refrigeration, it is completely different set of challenges to the static market.
What's next for Thermo King?
It's on everybody's objectives to continue reducing emissions, from top to bottom. We've made this clear.
Thermo King also recently acquired Frigoblock. We believe this will help us to deliver an advanced portfolio for truck and trailer with non-diesel technology.
Some Frigoblock systems use a generator installed on the vehicle. That's something in the future that we think will enable us to offer an advanced portfolio across the two brands on non-diesel technology.
We have a Cryogenic technology where we use technology that needs no compressor or engine. You use CO2 as the energy source. You expand liquid CO2 and remove the heat from cargo load. That is going well.
here are logistic challenges. But that is another realistic solution in our portfolio. We are doing the right things to tackle the future.