In this episode of the Bottlenecks Institute podcast we interview Louis Potok, CEO and Co-founder of Recoolit, about the oft-overlooked world of refrigerant management. Refrigerants (in particular those used in developing countries) are 2000X worse than carbon dioxide for trapping heat in the atmosphere. Recoolit partners with AC technicians to collect & destroy those refrigerants from end-of-live devices before they can escape into the environment. We discuss the state of the industry, the company's recent partnership with Google, challenges with traditional carbon credit registries, and why focusing on near-term climate solutions alongside long-term carbon removal could be crucial for preventing catastrophic warming in the next 25 years.
Groups and projects mentioned
Louis Potok of Recoolit
James: Welcome to the Bottlenecks Institute podcast, where we meet with leading entrepreneurs, researchers, and policy makers, and investigate the barriers to progress in their field and how to solve them. I'm your host, James Gray, and today we're joined by Louis Potok, the CEO and Co-founder of Recoolit, which is a company that captures refrigerants and destroys them before they can get into the atmosphere. Louis, welcome.
Louis: It's great to be here, James.
James: To set the stage, I’d love it if you could share with our audience a little bit about Recoolit in general and your approach.
Recoolit & the state of refrigerant management
[00:00:29] Louis: The background is that the world needs cooling both for comfort and air conditioning as well as cold chain for refrigerated goods and food (the food that goes around the world is mostly shipped in refrigerated shipping). And this is great, this is an important part of modernity. It's been a huge development across the 20th century, and it's spreading throughout the world now. But it comes with a big environmental cost. The one that most people know about is the energy use which is a big problem, but which we're not gonna talk about today. And the other is due to a particular set of chemicals that are used to keep food and people cool called refrigerants.
There have been a few generations of these, but altogether they account for about 6% of all global climate change. So at Recoolit we are focused on preventing those gases from hitting the atmosphere and doing it in a high integrity, high transparency way. We operate a project in Indonesia where AC technicians, building owners, facilities managers (anyone in the supply chain or the value chain of cooling across industrial/residential/commercial)... in situations where that gas would leak, either during maintenance or when devices reach end of life, that gas would just be vented out to the atmosphere directly, where it's two up to 2000 times worse than carbon dioxide on a per basis. We provide tools, training equipment, and financial incentives for people to collect that gas.
Instead, they bring it back to us. That's tracked on a digital platform that we developed and we then dispose of that gas in a fully sustainable, zero-emissions way. So we've prevented those emissions that would otherwise have happened, and then we sell carbon credits to corporations on the basis of those prevented emissions.
James: Having looked through a lot of companies working in GHG avoidance and removal, I really like the approach that y'all are taking. And I find it to be one that I'm sometimes surprised that there aren't more people working on this class of emissions specifically.
Louis: Yeah, it feels a little lonely out there sometimes in the refrigerant world! [Laughs]
Refrigerant reclamation vs refrigerant destruction
[00:02:26] James: In terms of the different classes of approaches around refrigerant management and destruction, I've seen some projects that are based around finding larger stockpiles and destroying them that way. And then there’s the Recoolit approach which is a little bit more direct and goes directly to the source before they get to the stockpile stage. Are there other classes of approaches?
Louis: The broader context is that these gases are going to be phased out around the world by 2050. That happens faster in rich countries, slower in poor countries, broadly speaking, under the Kigali Amendment to the Montreal Protocol which was signed in 2017 and ratified by various countries since then.
The first thing to do is: start turning off the tap, start reducing the supply of this that's going into the world. That's being done, and that has taken a lot of energy and initiative and it's great that has happened. What happens downstream of that has basically been ignored, and that's where we come in.
So there are these stockpiles that are now kinda illegal to sell, and there are other people working on that part of the problem. But in terms of actually dealing with what's coming out of the devices at their “end of life,” there are a handful of companies that do what's called reclamation; essentially recycling that gas and using it again. That is fairly prevalent in Japan and Australia, there's a little bit of it in the US, and there are companies doing that and that's great. That sort of pushes the problem out, right? Because that goes back into a device and then five years later would be vented again.
So unless you're perfect you're still going to have those emissions. That approach really only works in a few countries where the economics pencil out because the regulations are coming in, so the gas gets more expensive and the cost of recycling it becomes worthwhile.
In countries like Indonesia that are growing quickly or the cooling industry is developing quickly, the phase outs are slower. This collection and destruction at the device end of life is really pretty unique - we're the only ones really doing it.
Cement Kilns & other destruction methods
[00:04:13] James: So you’re using cement kilns for destroying the refrigerants. Were there other pathways that you were considering that you tried before landing on that? I’m curious how you landed on cement kilns specifically vs. other options.
Louis: We didn't invent the idea of using a cement kiln for refrigerants, I don't wanna take credit for that. Under that Kigali Amendment to the Montreal protocol that I mentioned, there's a technological assessment panel that reviews potential technologies for refrigerant destruction. They've approved a list of different approaches and cement kilns… turns out, there are lots of cement kilns, and there are very few purpose-built refrigerant destruction plants.
So we actually found a cement kiln in Indonesia (and I think this is really a kind of typical story from the world of refrigerants) that had been retrofitted to destroy refrigerants in 2007 or 2008.A grant from the Japanese Ministry of the Environment, kind of a pilot, a little writeup in a World Bank report, and then had basically been unused since then.
Over the 15 years since then until we arrived it was just kinda sitting there, nobody using it. So a little bit of funding towards a good cause, and then lack of follow up because there was no incentive for ongoing operation.
So that actually happened, that was perfect. And the existence of that facility is one of the reasons that Indonesia is the first country we launched in
James: And from a retrofit perspective, what did that actually entail for it to be ready to accept these refrigerants in the first place?
Louis: Cement kilns in lots of places are used for what's called co-processing, which is basically: while the cement is baking you dump some other stuff in there and it burns up. There's already emissions monitoring to make sure you're not dumping a bunch of toxic waste into the atmosphere when it burns.
It's very hot. And there's so much cement in there at one time that you can actually throw a lot of waste in there, and some of the kinds of waste they destroy in there actually add to cement (or act as a sort of alternative fuel). So to retrofit one for refrigerants, it's really just a matter of piping gas; setting up a set of tubes for gas to pipe into the kiln and then doing a kind of special test to make sure that that the kiln is at the correct negative pressure so the gas doesn't escape before it burns up.
Management approaches for different refrigerant types
[00:06:16] James: A lot of the stuff that y’all have focused on historically has been around AC units but you've mentioned that you’re interested in refrigerants overall (e.g. for refrigerators or other applications). From a technical perspective, is there much of a difference for the management methods you can use or is it pretty much what works for one works for all of them?
Louis: Yeah, so there's a class of refrigerants that we deal with and there are like four or five common ones in use that we see. In different applications you might use 410A versus 134A, it doesn't really matter in the end to us. The big difference is about the sort of lifecycle of the device and also how much charge it has, how much refrigerant is actually in there. So a household refrigerator might have 30 or 50 grams of refrigerant; a household AC unit might have two kilograms. So you know, 60 times more because obviously it's cooling much more space.
An individual refrigerator is not something we would deal with, that just doesn't make any sense for us. But a household AC is actually pretty interesting. And then of course if you go to the commercial side, like commercial refrigeration, they're massive devices and they do make sense for us.
One interesting note is that you actually can use some non greenhouse gas chemicals as refrigerants, but they all have different drawbacks. For example, you can use Isobutane (which has a refrigerant number R600a), it's good as a refrigerant except that it's flammable. So you can actually use it in a household refrigerator because there's so little of it that the flammability doesn't pose a risk - but you wouldn't want two kilograms of it circulating around, that would be a problem. So the different devices do have their different quirks, but by and large it's all the same stuff.
Cost per ton & reducing costs over time
[00:07:55] James: I might be getting this number wrong (let me know if that’s the case) but I remember reading somewhere that y'all are currently selling credits for ~$75 a ton. What are the vectors by which you could see those costs going down? Both in the context of what you're doing in Indonesia, but also as you eventually expand to other countries as well.
Louis: Interesting question. We actually do foresee that cost coming down quite a bit. When we've done deals at volume… $75 a ton is our retail cost/retail price. So we've definitely sold for lower than that. But we do see that cost dropping substantially over the next couple of years.
Some of that is just the benefits of operating in bulk and at scale and tightening up our own operations. We're still, I would say… Not quite in a pilot phase; we've gone through the cycle a couple times and kicked the tires, we know that things work. But we have a lot of scaling to do to drive those costs down operationally.
Avoiding Negative Incentives & Fraud
[00:08:46] Louis: One thing that's important to how we operate: we have to be very careful about the price that we pay as an incentive, like the buyback price for the refrigerant. We would love to raise that price because if we doubled or tripled that price for buyback (and it's a relatively small part of our cost actually)... we'd love to triple it and bring in as much more refrigerant as we can. But then we create these negative incentives, so we actually peg that price below market price for refrigerant because we don't want to incentivize people to go out, buy refrigerant, forge some documentation, have any incentive to defraud us.
So that's kinda the one fixed part of our cost. There's no reason to bring that down. We'd love to bring it up, but we can't. The efficiencies are gonna come from logistics, shipping, transportation, economics of destruction, and being able to spread the fixed cost of carbon credit testing and verification over a much bigger batch.
Adoption patterns for AC technicians
[00:09:33] James: In regards to the actual implementation from the technician perspective… is it something where you're trying to find your “super users,” people that are being really diligent on every single job about collecting these refrigerant canisters because it winds up being a meaningful side income for them? Versus just increasing adoption across a very large pool of people that maybe do it periodically, every once in a while. I can imagine there being very different paths and modes of operating based on how the adoption actually works from a technician perspective. Maybe it's too early to say, but I’m curious if you're starting to see one pattern versus another start to take shape.
Louis: That's a really insightful question. We have not seen partners that are dealing with this every single day. What we see instead is that there are different levels of sophistication: from freelance technicians who only work on ACs part-time or run a shop selling ACs, and then do a little bit of maintenance on the side to sophisticated contracting operations that are dealing with western style, highly developed shopping malls, office complexes, et cetera. And so the big differentiator is really project size, not frequency. And if we were ruthlessly optimizing for things that are easy to measure we would only go with those more sophisticated ones because the jobs can be a hundred or a thousand times bigger if they're dealing with the chiller system for a shopping mall rather than a household AC.
But what we've seen is that it's a very interconnected industry. We actually see a lot of network effects from working with basically membership associations for the freelance technicians, and then the people who run those run the slightly bigger servicing businesses, and then the facilities managers and the real estate companies wanna stay on the good side of those associations. And so it's helpful when we all show up to events, arm in arm. So we really are casting a broad net and trying to work with everyone. People move around, switch jobs, so it's good that they know who Recoolit is and that they have decided they like working with us. It's definitely a mix of kind of grassroots and more like “corporate enterprisey” stuff.
Carbon Registries & Methodologies for Refrigerants
[00:11:40] James: I saw y'all have one of the people that was involved at Vera as an advisor. Are y'all on any of the major registries currently, or are you selling direct? I’m also curious about the state of methodologies related to what you do on being reflected on some of the larger registries.
Louis: We are not issuing on any registry right now. This is basically due to the registries being very conservative and slow moving. There are methodologies for refrigerants, but they all cover the older generations of refrigerants that have been illegal for 15 or 20 years in the US.
We’re working with very similar chemicals. And we follow all of the same kind of protocols around data tracking (actually much better data tracking than they call for), the same kind of testing protocol and destruction process and technology. But essentially we're not in the approved list of gases in appendix A or whatever. We have actually been trying to get the registries on board with updating that list for years (since 2021, I think). It's been a weird time for carbon credits, it makes sense given all the greenwashing criticism that the established registries have been playing defense rather than offense. But no, fundamentally there's no reason we couldn't be in one of those registries once they get with the program and update things.
Essentially what we did is we said “we need something beyond our own word and the data we collect to prove to our buyers that we're having an impact.”
We worked with a think tank called the Carbon Containment Lab (which was at Yale and has since spun out) to develop, basically update the methodology for the gases we collect. They published that, and it was then taken up by a new registry called GHR, the Global Heat Reduction Initiative, which launched late last year. GHR is really focused on super pollutants and things like albedo changes that don't show up in typical greenhouse gas accounting but that are really important for the climate. So we're evaluating whether we want to issue with them or whether some other registry will also pick up this methodology.
What we've done so far is really just spot sales and pre-purchases for customers that either are satisfied with the level of evidence we've produced (which again, is higher than the registries require) or are willing to take the bet that we'll get on the registry.
We’re just about to finish a third party verification process, but not on a registry. So we took the methodology, we hired a verifier that does also verify for a registry, and had them verify a destruction that we did through that methodology for one particular buyer who wanted it.
So we're flexible. We're trying to figure out where the market is going, trying to find a registry that the whole sector can get behind as reputable and high integrity but that also is fast enough to keep up with the pace of what's going on in super pollutants. I think this is gonna be a big year for super pollutants. Hopefully we'll have a stronger answer by the end of the year.
James: I get that these registries need to be conservative in some ways, especially given a lot of tumult in that space that they're trying to now recover from. But on the other hand, we need so many more things like what y'all are doing where there's such a clear answer around like additionality and permanence (compared to, say, deforestation avoidance projects) that it's upsetting to hear in some ways that the industry hasn’t gotten there yet. But I'm sure that we will at some point.
Louis: I think just structurally the carbon market was set up for basically land-based projects. And you're gonna have some giant entity that controls the land (it was probably originally set up for governments) and the pace and the overhead costs are all set up for that.
And it actually has made it very hard, I think, for startups to operate in this space. The exception has been carbon removal where there's been VC interest and a sort of buyer's club that has helped companies get over that hurdle so that they don't have to go through a multi-year certification process before they can sell anything. That's a startup killer. So we're hoping that the super pollutant space will catch up to where carbon removal is. And we've seen some encouraging signs lately.
Recoolit's partnership with Google & the value of emerging strategies on near-term warming
[00:15:28] James: And on that note, I saw y'all recently inked a partnership with Google - congrats on that. What did the pathway towards that partnership look like, and what were the barriers that y'all had to get past along the way? Perhaps in terms of initially finding them, working through questions they had, etc. I would love to hear about how that partnership came to be and the things that y'all worked through on the path to get there.
Louis: This is the first sign of a hypothesis that I have had since 2020 when we incorporated, which is that carbon removal is amazing and really important and necessary… and is also decades away from being economical and there’s a lot of warming baked into people's assumptions in the meanwhile.
And so what I've really been thinking about is that what the world needs is a sort of a barbell strategy where you put emphasis on two very opposite sides of the scale. Carbon removal: lots of tech development needed, long term. And the thing that separates a lot of the great carbon removal projects is this durability question. Wherever you put the carbon, will it stay there for a thousand years?
On the other side, you have super pollutants, which are 2000X worse than CO2 on a hundred year time scale. But actually if you look at a 20 year time scale the super pollutants are 5000X worse because they have really intense spikes and then short atmospheric lifetimes. And so in the next 20 years, there are feedback loops in the climate system.
If we get to 2050 and Direct Air Capture (DAC) costs a dollar a ton, that's not a victory if the ice caps have melted, right? There's a lot that could go wrong in the next 25 years. And so my thesis has always been: invest in carbon removal, but then also prioritize these short-term solutions. Without losing sight of all the other important work going on in biodiversity and forestry and things like that. But these are two things that go really well together, and people who focus on carbon removal should also be focused on super pollutants (like the work that we do).
Basically, Google agreed with that. They had been looking for a new point of emphasis after carbon removal, a new thing to put their energy in. And the way that they were thinking about it was really sophisticated in terms of: what can they do that they could also advocate to everybody else?
Because once Google does something and they do it with publicity, everyone's gonna follow along. And they've been really catalytic in developing that carbon removal market. And so they said where else can we leverage that influence that we have? And so it's been an ongoing conversation for nine months at this point with them about how big is the super pollutant space, how much does it matter, what are the levers for influence and what's really needed to get to gigatons a year of prevention for things like refrigerants and methane and other super pollutants.
So we worked with them to develop that strategy, showed them what we were doing and they liked it. So we’re thrilled to be working together, and I think there's a lot of work ahead in terms of the stuff I mentioned on registries and how buyers think about these credits (e.g. are they using them in a sort of traditional one ton of CO2 equivalent commodity basis, or are they doing something more sophisticated?)
In their announcement, Google talked about how they're planning to do some more sophisticated things that they’re still figuring out the details for. For example, say you buy a refrigerant credit and the atmospheric lifetime of that gas is 20 years. And so you commit to replacing it with permanent carbon removal in 20 years (hopefully when the costs have come down). Something like that. There are other systems that people have talked about where, if you're making net zero claims, you actually don't do it on a ton of CO2 equivalent basis, but you think about different categories separately.
So when you emit carbon, you have a long-term impact. When you emit refrigerants (from your data centers or from your office buildings or your supermarket cooling, refrigeration) those have a short term impact. And so the credits you buy, you might wanna match up those profiles. So there's lots of interesting thinking about how companies are gonna use these credits and development around that, there are standards that have to be developed. And yeah, we're excited that Google's jumping in the ring there and we think that others are gonna follow.
Comparing GHG Removal and low-carbon cement
[00:19:15] James: One thing I find interesting is when developments from one space can be translated to another. There was an interview that you had where you were talking about some structural similarities between how we think about tackling refrigerants and how approaches towards decarbonizing cement. Both problem spaces have an energy consumption component and then a separate issue related to just the underlying chemistry. Are there parallels to how the low carbon cement space has advanced that you think could apply to refrigerant destruction or vice versa? Curious if that's been something that's influenced your thinking at all.
Louis: Short answer, no, that's not really an influential metaphor for me (and it took me a minute to remember having ever talked about that, that interview might have been a few years ago). But that basic breakdown of “energy versus chemistry” is really useful.
There’s a similar dynamic of “new technology being developed while you're also trying to mitigate what you're doing now.” I think the really big difference, of course, is the centralized versus decentralized nature of the industries, right? Cement is made in these giant factories (as far as I'm aware, I don't know how much distributed cement making there is around the world, but I think it's mostly giant factories.)
And refrigerant emissions are… there's some large installations of course, but it's so distributed, right? It's every car, it's every household, it's every office. It's all over the place.
Metaphors for explaining refrigerant management
[00:20:37] James: Are there any metaphors you find yourself returning to frequently? Either when explaining what you do externally, or internally as you work through problems?
Louis: I think an interesting point of kind of departure at least is other waste management processes. Essentially what we do is waste management. Or “waste-to-value” or something like that. And people are used to thinking about this, especially in countries like Indonesia where we work, because plastic waste is such an issue, right?
And so actually we got compared to plastic waste or lumped into circularity categories in that same way. And one really interesting kind of point for both of these is: what's the alternative, right? What happens to it, and how traceable or trackable is this?
If you're dumping a bunch of plastic bottles in the ocean, that's essentially the same as opening the vent for refrigerants, right? It just escapes. And that's very different from how we normally think about waste management, which is you've gotta put it somewhere, right? You have a household's worth of trash, where's it going?
So I think there are some parallels there in terms of the reverse logistics part of it. Where I think the real point of departure is: for waste management and plastic in particular, people are very focused on consumer knowledge, attitudes, and behavior.
For us, we don't think consumers should have to know about this. If you buy an air conditioner, it should not be part of the package that you're buying is a commitment for you to dispose of the waste new gas and you're like, “what can I do?” It's actually not that much. Really there's a professional problem. So yeah, I think it's useful in some ways, with some important points of departure.
James: I don't know a ton about waste management in Indonesia generally. Is plastic waste a government priority, or is it just something that's in the zeitgeist over there as like a public problem people talk about, or something that external parties are trying to solve? What is the state of circularity as an industry there?
Louis: Yeah, it's very much in the zeitgeist. You'll go to a fancy hotel and they'll have big signs about not using plastic. Especially in more touristy parts of it, I would say.
Cultural & Education Barriers: intangibility and non-local externalities
[00:22:38] Louis: The other thing that's really interesting about refrigerants and where it's different from a lot of environmental problems that people talk about, or plastic waste in particular, is that it's global. It's not local at all, right? There's no immediate impact on people in the place where it's emitted or on the ecosystems in the place where it's emitted.
It's abstract, it's invisible, it's global. Someone won a Nobel Prize in chemistry for figuring out how bad this stuff is. It's not tangible at all. And so that I think is a hurdle in how people think about it and the big one that we have to get over because it's a little bit challenging, right? To say oh, there's this invisible gas that you never think about and that you can't see any harm from- but it's bad, believe me! (And now you should do some extra work or pay some extra money)
So metaphors have their limit, I'm not sure we've cracked the right metaphor.
James: Even outside the metaphor framework (and this question's a little abstract), when you're thinking about the problem of refrigerant management generally, and how you think about it for your business, is there a visual mental model for what that looks like in your head? Is it like a tech tree, or some kind of table… what is visually in your head?
Louis: At the highest level, an image that I have in my head a lot is one particular graph of the phasedown schedule for these gases under the Kigali Amendment. So you set a base, there's a three year baseline in each country of how much refrigerant you're using, and then you drop down to 90% of that for a few years, then you drop down to 70% of that for a few years and so on.
And like this graph has been published in a bunch of places. Like, “We won! Refrigerants are not a problem! Kigali solved it.”
Louis: The area under that curve is what we're dealing with eventually, and that's tens of gigatons of emissions over the next couple decades. So that's like in my head as I explain the global problem.
In terms of the day-to-day stuff and how it works, I have a slide that I use for different kinds of presentations: here's the technician, and the gas goes to Reccolit, and then to the incinerator and then a dotted line for the credits because now it's a digital good. I'm not sure that's such a sophisticated or useful thing beyond the story, but I do find that the visual of what's actually happening: a technician with a cylinder and a scale and a pump kneeling in front of some big installation - that is what makes this click for people when they see that.
Because otherwise it's just words, right? But there is concrete reality that you can be grounded in how this functions.
Groups that should coordinate more
[00:25:07] James: Are there any entities that you wish worked together more? And that could be from the context of corporations, standard bodies, NGOs, research institutions, etc.
Louis: I wish everybody was focused on this more and I wish that they would all get involved separately and then talk to each other. Refrigerant management (and especially the end of life stuff we deal with) has been hugely neglected. I discovered this because it's the number one problem on Drawdown.
Louis: And as far as I know, it didn't make a lot of ripples. People mention it once or twice, but there's still so much missing from the space and there's so many entities that seem like they could be really well positioned to do it.
And actually it took a lot of research to convince myself that nobody was doing this and there were these gaps. So just off the top of my head, the Multilateral Fund (which implements the Montreal Protocol) focuses on phase-out and has a bunch of programs for low level implementation and technician training in countries around the world, but they just don't seem to focus on end of life management. There are some indications that may be changing, but they have tens of millions of dollars that they've spent on a variety of one-off programs that, as far as I can tell, haven't had much real world impact in terms of how this stuff is managed.
I would love them to do more and they would be the natural coordination point; they could play that leadership role if they prioritized it, I think. There are some governments that have done really well here: Australia has an extended producer responsibility system for refrigerants specifically. It's basically a tax or an extra fee that you pay to import refrigerants, and then that goes into a fund that essentially plays the role that credits play for us, of incentivizing collection at end-of-life. So that's great and more governments should do things like that.
But a lot, again, are focused on their implementation of the phase down rather than dealing with end-of-life. The manufacturers of ACs don't seem interested in this problem at all (with one notable exception that I'll get to) where they say okay, we're switching over our ACs to the new refrigerant.
Everybody's focused on this changeover, no one is focused on the problem in between. The companies that manufacture the gas (the refrigerant itself), they’re developing new chemicals, but end of life is not their problem. The one exception is a company called Daikin, which is one of the world's leading AC manufacturers. Japanese people confuse it for a daikon, which is a kind of radish, important to keep those separate. They're the only company that both manufactures ACs and manufactures refrigerants, so they pay some attention to this. They have a kind of company mandate to start using more and more recycled refrigerant, they do pay some attention to end of life, they have a couple of pilot programs around the world to do things like this. But again, it's all on their own, and it's only within Daikin air conditioners. If you're setting up this whole reverse logistics system, it doesn't make any sense to focus on one brand.
So they could, again, be playing more of a leadership role, I think, rather than just within their own ecosystems. Many others could be and should be doing more. But I guess that creates the opportunity for Recoolit
Superpollutants as a category
[00:28:05] James: Do you find yourself in the same rooms as a lot of the methane/methane abatement folks? They're different in many ways, but similar in that they’re overlooked compared to carbon.
Louis: There is this category of super pollutants, right? Non-CO2 atmospheric forcers that include greenhouse gases. There's this technical distinction between greenhouse gases and other climate forcers based on essentially whether they're mixed in the atmosphere. But if you're looking at super pollutants, there's methane and refrigerants and black carbon and nitrous oxide.
I think that those are not as coherent a unit of analysis as they could and should be. Methane is really the bulk of that, by numbers, and there's a lot more initiative in methane than there is in the rest of it put together because methane's part of some really big industries, right?
Methane is a big deal for ag. Methane is a big deal for oil and gas. And so because of that, there are large scale efforts to reduce methane. There are laws, there are satellites that can detect individual methane leaks or flares from space, which is cool. So a lot of attention is on methane.
There has been some more energy to stitching that category together, both to help situate methane and make the scientific case for it more robust, but also to package things like refrigerants along with methane so that people don't have to focus on eight categories, they can focus on one.
There's a group called the Climate and Clean Air Coalition which is a quasi-governmental body, almost, that puts focus on this category. We at Recoolit authored (and were a signatory of, along with a bunch of other orgs) an open letter last year on super pollutants and how companies should think about them and how governments should act. That was one of our efforts to build the space out. And xthen of course, what Google is doing now in this space is to try and bring this together. And it was interesting, I was talking about methane in the context of New York Climate Week and there was like a thread you could follow, almost like a theme through the week, of the super pollutant events.
There were a couple of methane events, there was a refrigerant event, there was a nitrous oxide event. So I went there trying to coalition-build at all of these things. But I would say there's still some formation to do for the space overall.
Detecting Refrigerant Leaks
[00:30:31] James: There have been a lot of strides made around methane leak detection. Is progress being made around refrigerant leak detection as well? Or is it one of those things where when there's a leak, consumers notice and they call somebody out because their bill is going up for less cooling, and so it doesn't make sense to try to develop sensors or satellites for it. Is this a space that people are working in?
Louis: You can detect refrigerant leaks. Partly through system operating characteristics, like: how cold is it? What's the pressure in the compressor?
You can also buy molecular detectors for refrigerants that have to operate in very close quarters because it rapidly diffuses (and we're talking about parts per trillion in the atmosphere).
Until recently you couldn't do any remote sensing for refrigerants. There was a paper that I still need to read in depth about being able to detect very large scale refrigerant leaks at the span of like hundreds of meters or thousands of meters.
Maybe some academic will write me an email after this saying “it's my work, let me educate you!” which I would love because I haven't read the paper yet. So you can detect it on a small scale and for groceries, where you're gonna lose a bunch of inventory… that's something that they have not invested in quite enough, I would say, but are thinking about. However, those kinds of leaks are not such a big part of overall emissions. Project Drawdown estimated that 90% are from end of life or maintenance situations and only 10% are leaks during operation.
I think that figure is probably high, but the correct number is probably between 50-90% or 50-70% or something. If you could catch leaks faster that would solve part of the problem but by no means all.
James: And I guess to the extent that there were large scale leaks, it would be good to know about those. But hopefully those are few and far between.
Louis: Yeah. And in the US, especially if you're using older gases that are already being phased out, those are expensive. There are actually already incentives for companies to deal with that. And in the US and other countries, you have to report leaks to the EPA (or the EPA equivalent), you can be fined, you have record keeping requirements. With refrigerant management, no part of it is easy but that's the easier part.
James: And to your point around super pollutants - from a category creation perspective, it's a great label for it. It's intuitive, it has immediate negative associations. Does it refer to specifically things with climate implications? Or are there super pollutants that actually don't have a specific atmospheric forcing effect but do affect human health or something else?
Louis: When I say super pollutants I’m referring to climate impact super pollutants. There are obviously lots of terrible things that we shouldn't put in the environment that you could call a super pollutant, but the category building that I'm talking about does not include those; it's only the greenhouse gases. And it's interesting (going back for my climate nerds), the first generation of refrigerants was the CFCs, the chlorofluorocarbons, which were actually notable and were banned not because of their climate impact, but because they destroyed the ozone layer.
So we've fixed the ozone problem for refrigerants, and now there's a subsequent problem. But actually that causes confusion for people because if people aren't up to date on the science, they learned in school about the ozone layer and the CFCs. And when I tell them about refrigerants, they say, “oh, that's a solved problem. We have the Montreal protocol.” Yeah, we solved one problem. There's another!
James: Yeah, externality whack-a-mole
Louis: Exactly. I gave a talk about this once where I used a whack-a-mole meme with the different gases coming out. So spot on.
Market Failures & Standardization Challenges for Reclaimed Refrigerant
James: To the extent we haven't covered them already, are there any other market failures that you think about a lot or that you wish got more attention in this space?
Louis: Which of the problems I think about are market failures? That's an interesting question. Aside from the big obvious one we've been talking about - that the externality of global warming is not priced into refrigerants. One thing comes to mind (this is a little bit tangential to what we mainly work on, but it's in the same vein): when you take refrigerant from an old device and you clean it up, you pass it through a distillation process and you resell it as reclaimed refrigerant. That has a certain kind of cachet. And there are companies, as we've said, that have mandates to use reclaimed refrigerant. It's exempt from the quotas of new production and consumption of refrigerants and it often commands a higher price.
However, that label “reclaimed”... this is the interesting thing about free markets versus government commoditization and standard making. What can you call reclaimed refrigerant? Because when you buy reclaimed refrigerant, it's actually never a 100% material from old ACs.
They use virgin material, usually because they can't get it quite clean enough to sell back into the market because there is some threshold. So they basically dilute it with virgin refrigerant. And there's a labeling question of: what is the maximum percent of virgin refrigerant you can put in?
And my understanding is that many of the folks who are not in the industry, but who know and think about the space, think that percent is way too high right now. And there are efforts to drop it. I don't remember the exact details, but that is an interesting case of: how do the market and the government and all these complex things interact? How do you set standards for things?
Problems that aren't a good fit for the private sector or academia
James: Are there any other problems in this space that you think are important to work on but aren't a good fit for the private sector or academia? Is there anything that's just not the shape of a problem that either those groups would work on specifically?
Louis: They're not a fit either for academia or for industry. So that would be like, government-shaped?
James: Government, or there's this whole idea around “focused research organizations,” that maybe have a little bit higher capital intensity than would normally be appropriate for pure academic research, but are also just too risky for it to be a company. So things like that, or that maybe just doesn't fit into any one category of traditional actors.
Louis: There's some interesting work happening. All the cooling systems we've been talking about operate on the vapor compression cycle. And there are (I’m by no means an expert in this) other things you can do. Like a swamp cooler, which a lot of people are familiar with, is a different cooling technology that does not use refrigerants. So that's great. That only works in certain environments. And so there have been some efforts to try and rethink cooling from the ground up without using refrigerants, using less energy, solving all the environmental problems. It's the kind of thing where people aren't quite sure, I think, what's the right way to develop that technology and bring it to market.
There was a Global Cooling Prize where a handful of the big manufacturers and one startup came in the top three (or whatever it was). But it was a prize specifically around low lifecycle emissions technology that’s appropriate for India. That could be made cheaply in the kinds of climactic conditions that India faces, because heat and humidity and operating conditions are very important for these sorts of technologies. And India has so many people who will need air conditioners in the coming years or need cooling. The fact that there was this prize competition - there is a gap in what's being done there. I'm not sure that prizes are the right model for this (they're not the right model for everything), but “What does cooling look like 30 years out?” is probably a question that more people should be thinking about and that might be a good fit outside of day-to-day corporate incentives.
Considerations for expansion into India
James: There was a fantastic piece that Jamie Wong wrote about y'all that touched on your decisionmaking process around which countries to start in. Part of that was: which parts of the world have a large population that will have rising demand for AC? India was one of the considerations, but I think he mentioned that there were certain barriers to starting a project there for newcomers who don't already have a presence there. To the extent that you're familiar, what would make it hard to expand to India as a market specifically?
Louis: I think India would be a great market for us. The reason that we didn't start out there is one, we had this cement kiln in Indonesia kinda lined up (or line of sight to it). But the other is that India has a bunch of different states with different regulatory regimes that can be quite different. And because we are basically waste management, it's a fairly regulated industry. It wasn't really about India as one market; but was there one market, one state there that was better than Indonesia for us? We decided no, but I could probably be convinced that we would've done just as well in India or in some part of India.
There is actually this more local factor to AC and to climate change around heat death.
Ministry for the Future (it’s a sci-fi book) has this really powerful opening chapter about an intense heat wave in India that kills a bunch of people. So that is very top of mind in climate consideration there. And it's not really as much of a risk in Indonesia; that's not gonna happen there in the same way, it's not as exposed.
James: I didn't love that book from a plot perspective, but that opening chapter was just incredibly well done in terms of really driving home the potential outcome and making this situation feel real. I can imagine that it rattled a lot of people over there who read that.
Open Problems in Refrigerant Management
James: Are there any other high level, open problems in this space or bottlenecks that we haven't covered that you think are either important or you wish more people were thinking about or prioritizing in terms of attention or funding in your space?
Louis: Starting at the very far end and working backwards. We talked about the future of cooling, but even with the next generation of refrigerants, there's natural refrigerants you can use and synthetics. The synthetics are advertised as zero GWP (global warming potential), but there was one study claiming that they broke down as high GWP molecules in the atmosphere.
Like the original molecule itself doesn't cause radiative forcing, but the successors might. So I wish someone would resolve that question because there was one paper three years ago and I haven't seen any follow up on it. I don't know whether to believe it or not.
A lot of the bottlenecks we deal with are really just kind of day to day… as with any kind of service based industry. And people experience this in the US, right? It's an aging workforce, the scheduling is not what office workers would expect, it doesn't operate on the same rules of formality that you and I might be used to dealing with. It does feel like a lot of the problems that we see around end of life refrigerant management are just due to these mismatches of what people are expecting versus what the reality is like on the ground for technicians and the time pressures they're under and their priorities when they're on the ground doing a job.
So there's maybe some kind of holistic thinking about that, that I haven't had time to do but that somebody else could do. It would be nice. How do you match up these new priorities with what people are already doing?
And we hear that, by the way, not only in Indonesia around end of life management. When we talk about refrigerant management, through a device’s lifecycle and record keeping, even for sophisticated US real estate operations, that can still be a challenge.
I think the long pole of the tent is around carbon credits. The work that we do needs to happen one way or another. It needs to be funded one way or another. Carbon credits, especially voluntary market carbon credits bought by private actors are the best way that we have found so far to get money into this ecosystem and be able to pay the technicians to go out and collect the gas and buy the machines they need to do so. So there needs to be a lot more development of this. We hope that the voluntary market continues to grow. We hope that Article Six means that more money flows into carbon markets generally, we hope that governments will set up different schemes for this, that there will be more experimentation.
Louis: I don't have a particular horse in that race ideologically. People feel very strongly sometimes about that. But yeah, I think if the funding is there, then we'll be able to be successful and other companies will be able to be successful in the space. But again, externalities, market failures; there has to be an incentive for people to do the right thing
How to get involved and support the work
[00:42:37] James: If people want to get involved or support you in your work, can they buy credits directly from you on your website, do they get in touch, what does that look like?
Louis: We have a website, recoolit.com, where people can buy credits or learn more about what we're doing. There's a “Contact Us” form. I read every entry, even the 30% of them that are really low-level spam. So you can always reach out to us that way or email me at [his first name]@recoolit.com.
If you go buy a credit you can see this whole data package that I talked about, of where the gas was collected and where it ended up. And I’m always happy to share what I've learned and learn more from people who are interested in the space.
