Opportunities for Natural Refrigerants in Small-Format ApplicationsE360 Webinar • May 16, 2017

Andre PatenaudeDirector, CO2 Business DevelopmentEmerson

Allen Wicher Director, Refrigeration MarketingEmerson

Speaker

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Andre PatenaudeDirector, CO2 Business DevelopmentEmerson

Andre Patenaude, director of CO2 business development at Emerson, is responsible for developing the global strategy around the company’s CO2industry stewardship, marketing initiatives and channel training as it relates to CO2 refrigeration systems.

Previously, Andre led Emerson’s Canadian market strategy, planning and implementation of programs for its refrigeration and air conditioning business. In total, he possesses 33 years of marketing, sales, and technical service experience working directly with end users, contractors, wholesalers and OEMs.

Speaker

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Allen Wicher Director, Refrigeration MarketingEmerson

In his role as director of marketing in foodservice, Allen Wicher is responsible for leading the business strategy and planning for growth in restaurants, convenience stores and commercial kitchens. Here, he leverages Emerson’s product and system solution development capabilities to support OEMs and end users. Allen has more than 25 years of progressive experience at global manufacturing companies in B2B and B2C markets, crossing multiple channels and influencers.

This presentation is intended to highlight changing developments in the law and industry topics. The law is frequently evolving and information and publications in this presentation may not reflect the latest changes in the law or legal interpretations. The statements and information provided in this presentation should not be construed as legal advice or legal opinion regarding any specific facts or circumstances, but is intended for general informational purposes only. The views and statements expressed during this presentation are the personal opinions of the presenter and do not represent those of Emerson Climate Technologies, Inc. or its affiliated companies. You should consult an attorney about your situation and specific facts and you should not act on any of the information in this presentation as the information may not be applicable to your situation. Although all statements and information contained herein are believed to be accurate and reliable, they are presented without warranty of any kind. Information provided herein does not relieve the user from the responsibility of carrying out its own tests and experiments. Statements or suggestions concerning the use of materials and processes are made without representation or warranty that any such use is free of patent infringement and are not recommendations to infringe on any patents. This presentation may not be copied or redistributed without the express written consent of Emerson Climate Technologies, Inc.

Disclaimer

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Agenda

Evolution of Natural Systems

Market Dynamics

Regulatory Implications

Commercial

Q & A

5

Evolution of Natural Systems

Full Circle for Natural Refrigerants

Natural Refrigerants

CO2, NH3, Propane

CFCR-12, R-502

HCFCR-22

HFC R-404A, R-507, R-134a, R-410A

1980s1990s

1930s2005+

Technical IssueSafety

Ozone DepletionMontreal Protocol

(1987)

Current Drivers:Refrigerant Regulations

o Banso Taxeso Incentives

Energy Regulation

Global WarmingKyoto Protocol, COP21 Kigali Amendment (MP)

F-Gas 2006F-Gas 2014

Europe: policy action at the National level

Slide design compliments of AHT7

Refrigerant Change Being Driven by Regulations and Voluntary Actions

8

Global Regulatory Actions to Ban High-GWP Refrigerants Place Renewed Emphasis on Natural Alternatives.

Organizations

Montreal Protocol Targets Ozone Depletion (R-22) Signed in 1987

North American Proposal Targets CO2 Emissions (High Global Warming)

F-Gas RegulationCarbon Tax

HFC Ban & Tax

INTERGOVERNMENTAL PANEL ONclimate change

Regulations

Kigali Amendment to the Montreal ProtocolOctober 15, 2016

Global Agreement on HFC Phase-Down Reached by 197 Countries of the World,in Kigali, Rwanda, on October 15, 2016

0

20

40

60

80

100

120

2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

A2 Countries(U.S., Canada, etc.) A5

CountriesGroup 1

A5 Countries Group 2

(India, Iran, Pakistan, Iraq,

GCC)

A2 Countries(Belarus, Russian

Federation, Kazakhstan, Tajikistan, Uzbekistan)

2024 Freeze

2028 Freeze

BaselinesA2 countries (U.S., Canada, etc.)•Avg. HFC consumption 2011to 2013 + 15% HCFC baseline

A2 countries (Belarus, etc.)•Avg. HFC consumption 2011 to 2013 + 25% HCFC baseline

A5 countries (Group 1)•Avg. HFC consumption 2020 to 2022 + 65% HCFC baseline

A5 countries (Group 2)•Avg. HFC consumption 2024 to 2026 + 65% HCFC baseline

GW

P W

eigh

ted

CA

P (%

of B

asel

ine)

Ref: http://conf.montreal-protocol.org/meeting/mop/mop-28/crps/SitePages/Home.aspx

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Market Dynamics

Poll Question 1

• Consultants• Contractors• End Users• Government/Trade Associations• Original Equipment Manufacturers• Other• Utilities• Wholesalers

What part of the industry do you represent?

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Global Market Dynamics

• Smaller Retail Formats– Deep Urban Markets– Convenience– Speed of Delivery

• Millennials– e-commerce– Clicks vs. Bricks

• Fresh– Buy Local– Natural and Organic

• Sustainability

• Regulations

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13

Balancing Four Basic Variables to Solve Customer Needs

0

50

100

150

200

250

HFC CO₂

Component electronics are a larger spend

% of top 50 retailers testingrefrigerant alternatives

$K

6%

83%+

0%

20%

40%

60%

80%

100%

2010 2015

Optional

Mechanical

Electronics

0%

20%

40%

60%

80%

100%

Sales % Margin %

Fuel andtobacco

Food and bev.

Other

C-stores targeting foodservice for growth

DOE regulations require new system designs

Now '17 Now '18 Now '20

% E

nerg

y -37%-35%

-17%

Reach-In Ice Walk-In

The Next Four Years Will Be the Most Dynamic Period of Change in the History of Our Industry

83%

Store Type andSurface Area (ft²) Trend Architecture and Refrigerant Toward 2020

Warehouses and Large Supermarkets

>40k ft²

Medium-Size Supermarkets

10k to 40k ft²

Small Supermarkets and Hard Discounts

6k to 10k ft²

C-Stores

1.2k to 6k ft²

Restaurants

<1.2k ft²

Refrigerant and Architecture Decisions in Context of Store Format

Centralized Architecture: NH3, Cascade and Booster CO2

Centralized: HFO/CO2 or Booster CO2

Centralized: HFO or CO2 Distributed HFO or CO2 Integrated Display Cases R-290

Integrated Display Cases R-290/Plug-Ins

Integrated Display Cases R-290

Semi-Centralized/Distributed HFO or CO2

Distributed HFC/HFO/CO2

Distributed HFC/HFO Multiple Units

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Holistic Facility Approach to Equipment Selection Can Minimize “Unintended Consequences”

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Toxicity, flammability,

working pressures

Heat transfer, latent heat

Revenue, first cost, total

cost of ownership

CO2 emissions, climate change

Legal, operations

Energy mgr.,design eng.

CEO, merchandising,

finance

Sustainability officers

Lack of technicians,performance specs and

service contracts

Utility incentives,continuous commissioning,

integrated HVACR

Millennials, fresh, urban stores

Natural refrigerants, regulations

Key Variables Stakeholders Trends

Developing a TCO Model, Regardless of Architecture

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Assumptions• 40,000 ft2 (2.0 million kWh)• 60% refrigeration • 1.2 million kWh @ $0.10• Year 1 = $120k energy• 7%/year energy increases

Unknowns• HFC taxes? • Future regulations?• Carbon credits?• Technology

advancements?

20Year 1

MaintenanceEnergy SpoilageLeaksInstallEquipment

2 3 4 7 8 9 10 14 15 16 17 18 195 6 11 12 13

$120k($0.10 kWh) $0.28/kWh $0.39/kWh

$562k

Typical Retail Cascade System — Schematic

Med-Temp.R-448A or R-449A

Low-Temp.R-744

HFC,NH3, R-290

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CO2 Transcritical Booster Operation

700 -1500psig

510psig

510psig

200psig

420psig

Must Use• Facility Management System• Electronic Expansion Valves• High-Pressure Gas Cooler

Controls• High-Pressure and Bypass

Valves• Superheat/De-Superheating

Valves• Pressure Transducers/Temp.

Sensors• Electronic Oil Controls• VFD Condenser Fans• Digital or VFD Compressor

1/suction group18

Scalable CO2 (R-744) System for Any Application

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Large

Medium to Small

C-Store / Restaurant

The Recent Evolution of R-290

• AHT began exploring natural refrigerants for self-contained in the 1990s

• Began serial production with R-290 in early 2000s

• More than 500,000 installations globally

• Thousands of installs all over North America

• Many other manufacturers online in recent years, with others to follow

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R-290 Micro-Distributed Architecture

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Images supplied by GreenChill Partnership Webinar on June 4, 2015, on “Supermarket Experiences with Micro-Distributed Refrigeration System Architecture”, Presented by Hussmann and Lowe’s Market

Life Cycle Climate Performance

DirectEmission

IndirectEmission

Refrigerant Leakage

Atmospheric Degradationof Refrigerants

Energy Consumption

Material Manufacturing

Material and RefrigerantRecycling

Refrigerant Manufacturing

LCCP

August 8, 2017ORNL’s Experiences Conducting Life CycleClimate Performance Test on Commercial

Refrigeration SystemsBrian Fricke (ORNL)

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Emerson “Enterprise Refrigerant Phase Down” Calculator

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Emerson “Enterprise Refrigerant Phase Down” Calculator (cont’d.)

(-71.7%) (-75.0%) (-77.3%)

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Regulatory Implications

Poll Question 2

• Very familiar

• Moderately

• Not very

How familiar are you with regulations pertaining to natural refrigerants?

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EPA Final Rules: July 20, 2015, and September 26, 2016Changed Listing Status of Certain HFCs*

*Abbreviated – For complete listing, see EPA Final Rule at: https://www.gpo.gov/fdsys/pkg/FR-2015-07-20/pdf/2015-17066.pdfSee EPA Final Rule; go to: https://www.epa.gov/sites/production/files/2016-09/documents/snap_status_change_rule_2_2060_as80.pdf

Final Rule: July 20, 2015 Final Rule: September 26, 2016

Phase-outrefrigerant

Supermarket(New**)

Supermarket(Retrofit***)

Remote condensing

unit(New)

Remote condensing

unit(Retrofit***)

Stand-AloneRefrigerated food processing and

dispensingequipment

(New)

Cold storage warehouses

(New)

Ice machines(New)

Verylow-temp

refrigeration(New)

MT < 2,200 BTU/hr.and not contain flooded evap.

(New)

MT ≥ 2,200 BTU/hr.with or without flooded evap.

(New)

LT(New)

LT and MT(Retrofit***)

R-404A/507A Jan. 1, 2017 July 20, 2016 Jan. 1, 2018 July 20, 2016 Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2020 July 20, 2016 Jan. 1, 2021 ^Jan. 1, 2023 OK OK

R-410A OK - OK - Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2020 - Jan. 1, 2021 ^Jan. 1, 2023 OK OK

R-407A/C/F OK OK OK OK Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2020 OK ^Jan. 1, 2021R-407C/F OK

R-407A:^Jan. 1, 2023

OK R-407C only

HFC-134a OK OK OK OK Jan. 1, 2019 Jan. 1, 2020 OK OK OK OK OK -Likely alternatives(Emerson perspective)

R-448A, 449A/449B OK OK OK OK - - OK OK OK - OK -

R-450A/513A OK OK OK OK OK OK OK OK OK OK OK -

R-290 - - - - OK OK OK - - - OK OKR-744 OK - OK - OK OK OK - OK OK - OK

R-717OK

(in primary loop of secondary system)

-OK

(In primary loop of secondary system)

-OK

(in primary loop ofsecondary system)

OK (in primary loop ofsecondary system)

OK (in primary loop ofsecondary system)

OK (in primary loop ofsecondary system)

OK (in primary loop ofsecondary system)

OK OK -

** Includes ice machines connected to a supermarket rack refrigeration system.*** EPA uses term “retrofit” to indicate the use of a refrigerant in an appliance that was designed for and originally operated using a different refrigerant. Term does not apply to upgrades to existing equipment where the refrigerant is not changed.

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Other Refrigerant Regulation Activity

Current Regulatory Proposals Target 150 GWP for Multiple Applications,Creating Demand for Refrigerants With GWPs of Less Than 150.

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Environmental Canada (EC)**:proposal November 26, 2016Commercial application GWP limit DateRefrigeration – centralized

systems (MT/LT racks) 1,500 2020

Refrigeration – condensing units 2200 2020

Refrigeration – LT stand-alone 1,500 2020

Refrigeration – MT stand-alone 700 2020

Foams 150 2021

Mobile refrigeration 2,200 2025

AC – chillers 700 2025Domestic refrigeration 150 2025

F-Gas (EU): effective May 20, 2014Commercial application GWP limit Date

Self-contained refrigeration 2,500 2020

Stationary refrigeration 2,500 2020

Self-contained refrigeration 150 2022

Centralized refrigeration 150 2022

– Except top side of cascade 1,500 2022

CARB: Short-lived climate pollutant reduction strategy — proposal Nov. 28, 2016 (comments Jan. 17, 2017)

Commercial application GWP limit Date

All refrigerant sales 2,500 ?

Non-residential refrigeration 150 ?

AC (non-residential and residential)

750 ?

** http://www.gazette.gc.ca/rp-pr/p1/2016/2016-11-26/html/reg1-eng.php

Comment period ends Feb. 8, 2017.

• Phase-down (NAP) option also proposed (2019 — 90%; 2024 — 65%; 2030 — 30%; 2036 — 15%; baseline 2011–2013)

Industry Efforts Are Increasing Around Flammable Refrigerants

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Building Codes for Mildly Flammable (A2Ls) Refrigerants Eligible for Fast-Track Adoption in 2018–2021 ICC Building Code Cycle

AHRI Flammable Refrigerants Research Subcommittee• Identify gaps in flammable refrigerant research• Develop road map to complete critical research for safe use• Focus on A2L and A3 refrigerants• Pushing for closure on items by end of 2017

Underwriters Laboratory and ASHRAE• Safety standards under revision to include mildly flammable refrigerant (A2L) accommodations• Charge increase proposal for A3 and A2L• Targeting end of CY 2017

– U.S.: UL 1995, ASHRAE 15, 34– International: ISO 5149, IEC 60335, EN378

Refrigerant Options

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R-410ALike

R-404A &R-407/22Like

R-134aLike

GWP Level

400–675

< 1500

~600

~300

R-410A

R-22R-407AR-407CR-407F, R-452A = XP44

R-452C = ARM-35

0 500 1,000 1,500 2,000

Pressureor

Capacity

R-32/HFC/HFOBlends

R-32/HFOBlends

HFC/HFOBlends

R-134a

CO2

R-404AR-507A

R-290

NH3

A1 – Non-Flammable

A2L – Mildly Flammable

A3 – FlammableB2L – Toxic, Mildly Flam.

R-123 Like(V. Low Pr.)

(3,922)

R-448A = N40R-449A = XP40R-449B = ARM-32N20

R-444B = L20L40R-454A = XL40ARM-20b

R-455A = L40x (HDR110)R-454C = XL20R-457A = ARM-20aARM-25

R-447B = L41z; R452B = XL55L41y, R459A=ARM-71a

<150

Qualitative – Not to Scale

R-515A

Watch: EPA SNAP, AHRIs A2L Research, IEC, ICC and UL Standards and Code Committee Releases, Equipment Manufacturers’ New Product Launches

R-32

DR2, HFO 1233zd

R-513A = XP10R-450A = N13z

HFO 1234yfHFO 1234zeARM-42

Refrigeration Application Alternatives Emerson’s Approvals in Progress or Complete

Volumetric Capacity/ Pressure

Naturals Mildly Flammable (A2L) HFO and Blends

Lowest GWP Non-Flammable (A1)

HFC/HFO Blends

Today’s Non-Flammable(A1) HFCs

Elevated

Medium“R-404A Like”

Low“R-134a Like”

GWP 0–5 0–150 350–1,300 1,300–4,000

R-744 (CO2)1

R-290 (Propane)3

R-717 (Ammonia)0

R-455A (HDR-110)146

R-454C (XL20)146

HFO-1234yf<1

HFO-1234ze<1

R-449A (XP40)1,282

R-448A (N40)1,273

R-513A (XP10)573

R-450A (N13)547

R-507A3,985

R-407A1,923

R-134a1,300

R-407F1,674

R-407C1,624 R-404A

3,943

A1 – Non-flammable

A2L – Mildly flammable

A3 – Flammable

B2L – Toxic, mildly flam.

R-515A392

R-457A (ARM-20a)139

R-449B (ARM-32)1,296

ARM-42131

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This List Is Subject to Change. Please Check Publication, Form 93-11,or With Emerson Representatives for Most Current Approvals in Progress. 31

Compliance Will Not Be Easy

CARB: All Commercial Refrigeration <150 GWP, Effective Date TBD.Natural Refrigerant Options Can Be Applied to All Commercial

EPA Refrig. DOE Energy

2017 2018 2019 2020 2021Supermarket (Rack)

Walk-In (Remote CDU)CoolerFreezer

Reach-In (Stand-Alone)

Cooler <2,200 BTU>2,200 BTU

Freezer

Ice Machine

Dispensing

<2,500 GWP

<2,500 GWP

20–40%

<600 GWP<600 GWP

<1,500 GWP

30–50%

5–15%

1/1/17

1/1/18

3/27/17

1/1/18R-290 approved

1/1/20

1/1/19

1/1/20

20–30%

<1,500 GWP

Withdrawn before publication in Federal Register. Under review by DOE.

Industry Preparedness to Meet Compliance Dates

Yes52%

Not yet44%

More Than Half Now Have a Basic Plan in Place, but 80% Are Not Ready for the Change.

Level of Preparedness:

EPA Plan in Place (n=46) DOE Plan in Place (n=47)

13% 52% 15% 17%

Very prepared Somewhat prepared

Only slightly prepared

Not at all prepared

15% 45% 19% 17%

Yes57%

Not yet36%

Level of Preparedness:

*Source: Emerson ResearchCR1. Does your company have a plan in place to meet the compliance dates?CR2. Overall, how would you rate your company on being prepared to meet the compliance dates?

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Commercial

Poll Question 3

• Safety• Cost• Servicing• Commercial risk• Other

If you have not implemented a natural refrigerant solution, why not?

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Europe: The Usage of Hydrocarbons Has Been Extended to Wider Refrigeration Applications

36

R-290 Wider Market Acceptance in U.S. Tracking What Occurred in Europe

Self-contained cases (MT)

Secondary systems

Small cascade systems Condensing

units

• Emerging systemarchitecture

• Low charge allows HC usage• Discounters, supermarkets

• Alternative natural ref. solution• High-charge HC usage• Supermarkets, hypermarkets

• R-290/CO2 solution• Total natural ref. solution• Cold rooms, convenience

• Economical natural ref. solution• Low charge allows HC usage• Cold rooms, convenience

Hydrocarbons already established in low-temperature cabinets successfully

U.S. EPA SNAP-Approved End Use Applications for R-290Increasing Charge Limits and Resulting Codes/Standards Revisions Evolving

37

ASHRAE/UL Working With Industry on Flammable Research Sub-Cmte. and Completing Charge Limit Increase and Safety Standards Proposal.

Effectivity of an R-290 Charge Limit Increase Could be 2018 for Stand-Alone Equip.

R-290: U.S. 300–500 gram charge limit in proposal A2L: U.S. 1 kg charge limit in proposal IEC/UL/ASHRAE/ICC:

1/8HP 1/6 1/4 1/3 1/2

Domestic Refrigerators (53g)

Vending Mach.

Bev. Dispensers

UC/Prep

Bottle Coolers

3/4 1

1DS 1DG 2DS 3DS 3DG

X = Applications Not Approved by EPA SNAP Final Rule

X

Ice

Walk-Ins (Remote)

Commercial Reach-Ins

X2DG

150g Charge Limit Current

Larger Units Achievable With Multiple Systems

300+ g Charge Limit in ProposalIn Proposal

(stand-alone, OK)

R-290 U.S. Stand-Alone End Use Applications Did You Know?...

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EPAUL 427 Charge Limits

DOEWaivers

End Use SNAP-ApprovedCan use multiple 150g. refrig. systems in a single appliance

End Use SNAP-ApprovedCan use multiple 150g refrig. systems in a single appliance.Must mitigate 150g to 300g charge:

a. WICF volume min. per SA3.3.1 ORb. Refrigerant detection per SA4.3 ANDc. Class 1, Div. 2 components

Test Procedure Exists

Waiver not needed

Test Procedure Does Not ExistYes, OEM needs DOE waiver approval to sell

Be Sure to Consult Authority Having Jurisdiction (AHJ) for Additional Code/Standard Requirements Before Installing.

The Case for Naturals: R-290

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Charge Limit Increases Will Open up Market Opportunity for R-290.

Advantages• Hydrocarbon-based, non-synthetic

substance• EPA-approved in commercial

refrigeration applications• Very low environmental impacts:

GWP = 3; ODP = 0• High-efficiency, high-performance,

reliable• LT and MT applications that address

EPA and DOE compliance challenges

• Safe when proper protocols and procedures are followed

• Hydrocarbons can be used in multiple applications

Be Mindful Of• Classified A3 flammable refrigerant

• Not a “drop-in” refrigerant; equipment and components designed for R-290

• Globally mandated low-charge limits of 150g restrict application range

• Authority Having Jurisdiction holds final installation approval

• Lack of trained technicians to service

• Charge limit, safety and related legislations/regulations are the key areas to address for hydrocarbons

The Case for Naturals:

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Advantages• Future-proof from regulations• EPA-approved in commercial

refrigeration applications• Very low environmental impacts:

GWP = 1; ODP = 0• LT and MT applications that

address EPA and DOE compliance challenges

• Proven; efficiency, high-performance and reliable

• Safe when proper protocols and procedures are followed

• Versatile applications: Industrial, food retail, C-stores, commercial and residential heat pumps

Be Mindful Of• Not a “drop-in” refrigerant

• Higher pressures relatives to common refrigerants

• When system is off, mitigation strategies required to manage “standstill pressures”

• Low critical point 87.8 °F, requires gas cooler

• High triple point of 62 psig; need to avoid dry ice

• High ambient regions require specialized strategies to optimize energy

CO2 a Proven Future-Proof Technology for Many Applications

Some End Use Installations of Natural Refrigerants

WalgreensEvanston, ILNet Zero Store, Geothermal, CO2

SproutsDunwoody, GATranscritcal CO2Booster

Piggly WigglyColumbus, GAAmmonia/CO2 Hybrid

H-E-BAustin, TXR-290 Micro-Distributed

AldiBuffalo, NYTranscritical CO2Booster and Propane

MetroMontreal, QCAmmonia/CO2Secondary

IGAMagog, QCTranscritical CO2Booster

Whole FoodsSanta Clara, CAPropane Chiller/CO2Secondary and Cascade

Natural Refrigerants Are Gaining Traction in North America.41

DISCLAIMERAlthough all statements and information contained herein are believed to be accurate and reliable, they are presented without guarantee or warranty of any kind, expressed or implied. Information provided herein does not relieve the user from the responsibility of carrying out its own tests and experiments, and the user assumes all risks and liability for use of the information and results obtained. Statements or suggestions concerning the use of materials and processes are made without representation or warranty that any such use is free of patent infringement and are not recommendations to infringe on any patents. The user should not assume that all toxicity data and safety measures are indicated herein or that other measures may not be required.

Thank You!

More to Come,So Watch This Space!

Andre Patenaude – andre.patenaude@emerson.com

Allen Wicher – allen.wicher@emerson.com

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