Support California’s $15 Million Incentives for Natural Refrigerants

NASRC is calling on our members and partners to demonstrate support for the proposed $15 million allocation to refund the California Air Resources Board (CARB) F-gas Reduction Incentive Program (FRIP) for the 2021-22 California budget (see page 9). Without strong demonstrated support from the industry, the proposed funding is at risk of redistribution to other initiatives. 

FRIP was established as part of the California Cooling Act (SB 1013) to alleviate the financial burdens associated with ultra-low global warming potential (GWP) refrigerants and was allocated $1 million under California’s 2019-20 fiscal year budget. The initial round of funding provided grants for 13 natural refrigerant projects, which NASRC coordinated under our Aggregated Incentives Program (AIP), see all awarded projects here.

Though the first round of funding demonstrated the potential of the program, it only scratched the surface of offsetting the significant cost burden California food retailers face in transitioning away from HFCs. With the capital cost of replacing a supermarket refrigeration system averaging over $1 million, replacing the roughly 4,000 supermarket locations in California equates to $4 billion in capital equipment costs that must be paid by food retailers operating in the state. This cost burden is only expected to increase with increasing regulatory pressures at the state and federal levels.

What’s Needed?

Given adequate funding renewed over a multi-year period, FRIP’s proven framework could go a long way in supporting the transition, but there is no guarantee that the proposed allocations will be approved. While we are pleased to see such a significant increase in the proposed budget compared to the first round, we are concerned that the money could be redistributed to other initiatives if the California legislature does not hear from the industry.

To that end, NASRC has prepared a template letter of support to help our members and partners demonstrate support for the funding. Our goal is to protect and increase the funding allocations in this and subsequent budget cycles so that FRIP can continue to support California food retailers and also provide a blueprint for other states to follow.  

If you are interested to submit a letter of support, please contact us for a template and instructions for submission.

NASRC's Incentive Program Drives $880,000 for Climate-Friendly Grocery Stores

Mill Valley, California - The North American Sustainable Refrigeration Council (NASRC), a 501(c)(3) environmental nonprofit working in partnership with the grocery industry to advance climate-friendly natural refrigerants, recently announced that they have secured a total of $880,000 in funding support for natural refrigerant grocery projects through their Aggregated Incentives Program (AIP) Pilot.

“We launched the AIP program to support grocers facing increasing regulatory pressure to transition away from HFC refrigerants,” said Danielle Wright, NASRC Executive Director. “Incentives have the power to offset cost premiums and make natural refrigerants a feasible business choice for grocers.”

Launched in 2020, NASRC’s AIP Pilot was a first-of-its-kind, no cost platform through which NASRC coordinated incentive funding for natural refrigerant projects in California grocery stores. The pilot was designed to bolster the California Air Resources Board (CARB) F-gas Reduction Incentive Program (FRIP), which was established to support the transition to climate-friendly refrigerants resulting from CARB’s HFC reduction measures that take effect on Jan 1, 2022.

“NASRC’s assistance was critical in obtaining the FRIP funding,” said Jay Schick, Refrigeration and HVAC Buyer at Costco, a FRIP awardee and AIP Pilot participant. “We hope to see the program grow in the future as this is key to accelerating our transition from HFC refrigerants.”

FRIP is part of California Climate Investments, a statewide program that puts billions of Cap-and-Trade dollars to work reducing greenhouse gas emissions, strengthening the economy, and improving public health and the environment — particularly in disadvantaged communities. FRIP was established to address the fact that upfront costs remain a significant hurdle for grocers to transition to low global warming potential (GWP) refrigerants.

Recently, CARB awarded FRIP grants to 15 grocery projects across California, 12 of which were funded through the NASRC AIP Pilot and represented $880,000 of the total $1 million awarded. The projects funded through the AIP Pilot will use climate-friendly natural refrigerants with near-zero GWP, such as CO2 and propane.

The grants will support innovative projects, including partial transitions to natural refrigerants in four existing Whole Foods Market facilities. Because natural refrigerants are not a “drop-in” solution, they require a full system replacement rather than a simple gas retrofit, representing a much greater challenge for grocers. “There’s no straightforward solution for replacing HFC equipment,” said Mike Ellinger, Principal Program Manager of Engineering, Compliance & Sustainability at Whole Foods Market. “The FRIP funding will allow us to test several innovative approaches and the results will inform our strategy for existing stores in the future.”

ALDI, another national chain grocer, received awards for seven projects through the AIP Pilot, four of which are located in disadvantaged communities that are disproportionately impacted by the changing climate. "The funding ALDI receives through FRIP supports our continued dedication to natural refrigerant technology,” said Dan Gavin, ALDI Vice President of National Real Estate. “At ALDI, we continue to explore new ways to lower our carbon footprint, and we are particularly excited about the energy data we will receive from this outstanding program."

In addition to the grants, FRIP awardees will participate in data sharing and service workforce development activities, further addressing barriers that are slowing the adoption of natural refrigerants in the US. NASRC is supporting the implementation of these activities as part of their AIP Pilot.

Due to the COVID pandemic, the FRIP funding was not renewed in the California 2021 fiscal year budget. NASRC is advocating for the program to receive additional funding in the future to support full or partial system replacements in existing stores. There will be opportunities to submit comments in support of renewed FIRP funding later this year, but in the meantime NASRC is thinking bigger.

“Our goal with the pilot was always to expand beyond California,” said Wright. “Given the upcoming federal HFC phasedown, there is a need for national funding support to aid the transition. That’s where we’re looking next.”    

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About North American Sustainable Refrigeration Council
The North American Sustainable Refrigeration Council (NASRC) is a 501(c)(3) environmental nonprofit working in partnership with the grocery refrigeration industry to advance climate-friendly natural refrigerants and reduce greenhouse gas (GHG) emissions caused by traditional refrigerants. The organization works with stakeholders from across the grocery refrigeration industry, including over 38,000 food retail locations, to eliminate the barriers preventing the adoption of natural refrigerants. For more information, visit www.nasrc.org.

NASRC AIP Drives $0.9 Million for Nat Refs!

NASRC has secured new funding for natural refrigerant projects through our Aggregated Incentives Program (AIP) Pilot, which was developed to bolster the California Air Resources Board (CARB) F-gas Reduction Incentive Program (FRIP) and accelerate funding resources for natural refrigerants.

AIP Funding Results

Of the 16 recently awarded CARB FRIP grants, 13 grocery projects were funded through the NASRC AIP Pilot and represented $880,000 of the total $1 million awarded!

Other AIP Outcomes

In addition to awarded funds, the AIP Pilot resulted in several other exciting initiatives. Here are some of the other outcomes & next steps:

• New Funding Support Through Carbon Offset Credits
  Through the AIP Pilot, a new funding opportunity emerged that will provide grocers funding for the sale of carbon offset credits from natural refrigerant projects. To develop a scalable market of carbon offset credits, NASRC is launching a pilot and will begin soliciting project submissions in the next few weeks.
  

• Performance Data to Inform Industry Best Practices
  Southern California Edison (SCE) is developing a comprehensive M&V study to evaluate and compare the energy performance of FRIP projects, which include multiple natural refrigerant system types across various climate zones. NASRC will support the design and roll-out of the study and coordinate information sharing throughout the industry.
  

• Technician Training Opportunities
  FRIP awardees will provide technician training opportunities to support a workforce that is trained in the installation and maintenance of natural refrigerant technologies. NASRC will work with grantees and CARB to support the workforce development activities.
  

• Scaled Incentive Opportunities
  The AIP Pilot demonstrated the demand for incentives to offset the costs of natural refrigerant technologies as well as the benefits of incentive programs designed to address other natural refrigerant barriers. NASRC is evaluating lessons from AIP and assessing new opportunities to develop scalable sources of natural refrigerant funding support at a national level.

Have more questions about AIP or natural refrigerant incentive opportunities? Contact us.

New CARB Proposal Represents Successful Collaboration with California Retailers

Sacramento, California – At the January California Air Resources Board (CARB) public workshop, CARB announced changes to the proposed rules for stationary refrigeration systems, which were the result of a successful collaboration between CARB and California retailers over the preceding several months.

CARB first announced the rulemaking for the HFC reduction measures - which aim to reduce emissions of Hydrofluorocarbon refrigerants (HFCs) typically found in supermarkets - in October of 2017. The rulemaking was driven by California legislation, which established the State’s goals to reduce greenhouse gas emissions to 40% below 1990 levels by 2030, and specifically to reduce HFC emissions to 40% below 2013 levels by 2030.

The original proposal called for all newly installed refrigeration equipment, whether installed in a new or existing facility, to use refrigerants with a Global Warming Potential (GWP) below 150. Natural refrigerants, such as carbon dioxide, ammonia, and propane are zero or near zero GWP solutions, but are challenging and costly to install in existing facilities because they require a full system replacement.

“The proposed definition for new equipment risked an unintended consequence to halt all upgrade and retrofit work across existing stores to avoid triggering the <150 GWP requirement,” said Danielle Wright, executive director of the North American Sustainable Refrigeration Council (NASRC). “Not only would this be bad business for grocers, but it would have ultimately prevented CARB from achieving their emissions targets.”

Following a public technical working group meeting in August of 2019, several California retailers approached the NASRC with a request to facilitate a different proposal that would come directly from the retailers and still meet CARB’s emissions reduction goals. The retailer group, which represented the majority of supermarket locations in California, convened in late-September to develop an alternative proposal. This new proposal recommended that for the <150 GWP requirement, new equipment be defined solely as new store construction or a complete system replacement.

To compensate for the reduced emissions reductions from the restricted definition of new equipment, the retailers proposed a Greenhouse Gas Potential (GHGp) program for existing stores, designed to reduce overall emissions across a chain while allowing flexibility at the store level. Under the GHGp program, retailers would reduce their emissions through lower-GWP refrigerants, charge reductions, or a combination of both, giving them the flexibility to determine which stores to retrofit to meet the target.

CARB was receptive to the retailer proposal and suggested a target of 55% GHGp reduction from a 2018 baseline by 2030. CARB also proposed an alternative hybrid approach, which would require retailers to meet a chain-wide “weighted-average GWP” target of 1400 by 2030. The intention of both programs was to give retailers the maximum possible flexibility while also ensuring CARB’s emission reduction target is achieved.

To support the transition to low-GWP refrigerants, CARB has established an F-gas Reduction Incentive Program (FRIP), which has received $1 million from the Greenhouse Gas Reduction Fund (GGRF) for the 2019-20 fiscal year. The program will launch for project solicitation this Summer.

“While this is a great example of a successful collaboration between California retailers and CARB, the regulations still present a challenge for retailers,” said Wright. “The launch of the incentive program is an important step to support the transition to low-GWP refrigerants, and our goal is to help bring more funds to the table.”

This proposal has yet to be finalized by the Board and CARB continues to seek feedback and stakeholder input, which can be sent to HFCReduction@arb.ca.gov or to Richie Kaur at richie.kaur@arb.ca.gov. Comments on FRIP are requested by March 15th and can be submitted to Aanchal Kohli at Aanchal.Kohli@arb.ca.gov. The materials from CARB’s workshop are available here.

For more information, please contact info@nasrc.org.

NASRC California Workshop Drives Incentives for Low-GWP and Energy Efficient Technologies

San Francisco, California – On July 18th, the North American Sustainable Refrigeration Council (NASRC) organized a workshop aimed at aligning stakeholder goals and optimizing energy efficiency opportunities with low-GWP refrigerants. The workshop featured an update on refrigerant regulations from the California Air Resources Board (CARB), as well as an overview of low-GWP technologies that will help supermarkets comply with the new regulations. The intention of the workshop was to highlight the goals and challenges of key stakeholders and identify potential “win-win-win” solutions.

“We often hear that there is a perceived trade-off between GWP reduction and energy efficiency. But we see an opportunity to optimize energy savings with natural refrigerants, which represents a win for CARB, supermarkets, and California utilities. That was our primary goal with this workshop.”

- Danielle Wright, Executive Director, NASRC

The workshop was set in the context of California’s goals to reduce greenhouse gas emissions to 40% below 1990 levels by 2030 and to reduce HFC emissions to 40% below 2013 levels by 2030. To achieve these goals, CARB has proposed new regulations that would prohibit the use of refrigerants with a global warming potential (GWP) above 150 in new construction and ban the sale of virgin refrigerants with a GWP above 1,500 starting in 2022.

Though regulatory compliance is an important objective for supermarkets, they have a number of other goals to consider, such as keeping their products cold and their costs down. The pending regulations present a challenge for California supermarkets because many low-GWP technologies still represent a considerable cost premium. To really accelerate the adoption of refrigerant technologies below 150 GWP, supermarkets are going to need some financial support to offset cost premiums. 

The workshop featured several potential solutions to help overcome existing cost hurdles, starting with a state incentive program. This year, the California State Legislature allocated $1 million to the state’s low-GWP incentive program, which was established in 2018 under the California Cooling Act. This incentive program is intended to promote adoption of new low-GWP refrigerant technologies throughout California. CARB announced that they are currently working to design the program and are looking for input from stakeholders.

In addition to state-level incentives, the workshop highlighted utility funding opportunities for projects that contribute to their energy efficiency targets. Workshop speakers discussed existing utility incentive opportunities that can apply to low-GWP refrigerant technologies, such as Pacific Gas and Electric’s (PG&E) custom incentive program and commercial whole buildings program. California supermarkets can participate in these programs to receive incentives for the energy and demand savings associated with projects using low-GWP refrigerant technologies. Customers of any investor-owned utility (IOU) can also take advantage of on-bill financing programs, which offer zero percent interest loans that are repaid through the customer’s utility bill.

A new financing mechanism that will leverage carbon offset credits for greenhouse gas emissions reductions from natural refrigerant projects was also discussed. In this scenario, the carbon offset credits would be purchased from a supermarket, reducing the upfront cost of a natural refrigerant project. The NASRC and Natural Capital Partners are partnering to pilot this carbon financing model with the hopes of scaling into a larger program. This funding source could then be coupled with state or utility incentives to make a low-GWP refrigerant project financially feasible.  

“Any one of these financial options may not be enough to allow a supermarket to move forward with a natural refrigerant system,” said Wright. “But combining a number of financial mechanisms may be the solution that allows supermarkets to adopt natural refrigerant systems that will not be subject to future regulations.”

NASRC intends to help drive each proposed solution forward with the goal of combining funding opportunities to minimize cost barriers and contribute to the goals of California supermarkets, California utilities, and CARB.

The worship was co-hosted by PG&E and took place at their Pacific Energy Center (PEC) facility in San Francisco. Sponsored by Climate Pros, Hillphoenix, AHT Cooling Systems, and Bitzer US, the workshop was attended by over 100 California stakeholders, including supermarket retailers, service contractors, equipment manufacturers & suppliers, government agencies, utilities, engineering & design firms, consultants, and NGOs.

Check out more upcoming NASRC events here.