Ban on the use of HCFCs
2015 marks the year in which there will be a total ban on the use of Hydrochloroflourocarbons (HCFCs), which are still in use in many commercial buildings as refrigerants which includes R22 (chlorodifluoromethane) found in air-conditioning units, refrigeration systems, heat pumps or fire protection systems (RAC systems).
HCFCs are ozone-depleting substances, which contribute towards global warming and RAC systems will need to be converted or replaced entirely. Property owners, occupiers, managers and maintenance contractors are all likely to be caught by the legislation and should be aware of where the responsibility lies and how compliance is dealt with in a lease or management agreement.
- 1st January 2010 – virgin HCFCs cannot be used for RAC systems maintenance. This applies to all virgin HCFCs (even if purchased and stockpiled before the deadline);
- 1st January 2010 – only recycled and / or reclaimed HCFCs can be used to service or maintain existing RAC systems if certain conditions are met; and
- 1st January 2015 – an absolute ban on ‘using’ recycled and / or reclaimed HCFCs in RAC systems. This applies to all recycled / reclaimed HCFCs, even if purchased and stockpiled before the deadline.
No virgin HCFCs should have been used for RAC system maintenance or servicing since 31 December 2009. The 2015 ban will allow property owners to carry on using equipment that contains HCFCs, but there must not be any maintenance or servicing undertaken of the equipment, which involves re-filling with recycled or reclaimed HCFCs.
There are 3 options available to property owners:
- replace existing equipment and install a new system using a permitted non-ODS substance. With new equipment it could be argued that higher rent could be charged, as tenants would be attracted to the fact that no works will need to be undertaken in the near future which they may need to contribute to;
- convert existing equipment using a permitted non-ODS substance. A converted plant may be less efficient and lead to higher energy costs, however it will be able to be maintained; or
- refrain from doing anything, which delays the inevitable. This option is arguably appropriate where guaranteed stock of recycled / reclaimed HCFC is at the right price; however this is a short-term option up until 31 December 2014. If the system is very reliable and will continue without the need for repair/maintenance for a number of years then it could be argued that doing nothing is appropriate.
Who will pay the cost of the conversion or replacement?
Property owners will most probably pay initially and may find it difficult to recover these costs from the tenants without negotiation. Landlords should reach an agreement with the tenants early on in respect of any tenant’s contributions towards the expense of carrying out any works to RAC systems. A Landlord may be able to recover the costs through the service charge mechanism. Although, the Landlord must consider that this will be unattractive to a tenant who may then look ahead and decide not to renew their lease and instead exercise a break.
If the Landlord is left with the costs of replacing RAC systems, they should consider the Enhanced Capital Allowances scheme for energy saving technologies that may be of financial assistance.
In conclusion, apathy is only a short-term option in response to the impending ban. Property owners should take time to consider their options and plan ahead.