The market for low GWP refrigerants is expected to develop at a CAGR of over 9% during the forecast period. The major factor driving the growth of the low GWP refrigerant market is the low environmental impact and the rising regulatory barriers on the usages of high GWP refrigerants. On the flip side, unfavorable conditions arising due to COVID-19 outbreak has created a huge impact on the global market.
- Low GWP Refrigerant is extensively used in the commercial sectors. Grocery stores, supermarkets, etc. highly depend on refrigerants and is the largest market for low GWP refrigerant. - Europe is expected to be the largest market due to the large-scale production and heavy consumption of the low GWP refrigerant in the region.
Key Market Trends Commercial Refrigeration to Dominate the Market
- Low global warming potential (GWP) refrigerant solutions have been in greater demand for air conditioning and refrigeration applications. These low-GWP refrigerants increase energy consumption, introduces safety risks, and require significant equipment modifications. - Moreover, these are primarily used to reduce service equipment energy consumption and carbon emissions by 50% compared to HFCs and CFCs. - Low global warming potential (GWP) refrigerant solutions have been in greater demand for air conditioning and refrigeration applications. These low-GWP refrigerants increase energy consumption, introduces safety risks, and require significant equipment modifications. - Manufacturers have already shifted or planning to shift to new lower GWP alternative refrigerants, as they provide better energy performance as current refrigerants, while reducing environmental impact. - Commercial refrigeration segment includes varied applications, including food safety in dairy, meat, fisheries, and other food industries that rely on efficient cold chain network (commercial freezers and refrigerators), cold chain preservation in the pharmaceutical industry, commercial air conditioners. - According to The Japan Refrigeration and Air Conditioning Industry Association (JRAIA) June 2019 statistics, the 2018 commercial air conditioners demand has reached 14.90 million units, an increase of 2% from the previous year. - With the increasing demand for frozen food products and the presence of a highly competitive market with low margins, most of the food processors, distributors, and retailers are shifting from the manually operated obsolete facilities to the high bay deep-freeze warehouses, where commercial refrigeration are widely employed. - Moreover, the expansion of retail food chains by the multinational companies and the growth in international trade (due to trade liberalization) have led to an increase in the demand for the cold chain processes. This, in turn, is augmenting the demand for commercial refrigeration across the world.
Germany to Dominate the Europe Market
- The German economy is the largest in Europe and the fifth-largest in the world. In 2019, the German economy grew by about 0.6%, which had been its weakest growth rate in the last five years. The economic growth of the country is affected by various factors, such as trade tensions leading to reduced exports and recent government policies on debts and fiscal adjustments. The country is in plans to stop the further downfall of the economy, due to the COVID-19 impact by announcing availability funds (of over USD 600 billion), to ensure growth and smooth functioning in various public sectors in the near future. - At present, like other European countries, Germany is facing a chronic health concern and economic damage due to the COVID -19 pandemic. According to the IMF, the nation’s GDP is expected to witness a huge downfall and is expected to decline by 7% in 2020. - The Regulation (EU) No. 517/2014 of the European Parliament and of the Council of 16 April 2014 on fluorinated greenhouse gases stated that from 1 January 2020, “stationary refrigeration equipment that contains, or whose functioning relies upon, HFCs with global warming potential (GWP) of 2,500 or more except equipment intended for an application designed to cool products to temperatures below -50 °C will be prohibited". - Germany has the largest construction industry in Europe. The construction industry in the country has been growing at a slow pace, which is majorly driven by the increasing new residential construction activities. - ccording to the construction industry associations, the completion of construction of new houses is estimated to be around 315,000 in 2019, which is higher when compared to total completions in 2018, which was 300,000. The increasing migration to the country has been stimulating the demand for new residential construction. ?About 3.6 million migrants are expected to arrive in Germany, by the end of 2020, which will require at least 350,000 new dwellings per year. This is expected to boost the residential construction sector, which will convert into demand for the market. - The German food and beverage industry is the fourth-largest industry sector with a production value of more than EUR 200 billion (in 2019). Food processing is one of the major activities in the domestic food and beverage industry, which creates a significant need for refrigeration. The domestic food and beverage industry comprises about 6,000 small- and medium-sized companies, serving both domestic and foreign demand present in the market. The food and beverage export business in the country exceeds more than EUR 70 billion. - Germany leads the European automotive market, with 41 assembly and engine production plants that contribute to one-third of the total automobile production in Europe. Germany, which is one of the leading manufacturing bases of the automotive industry, is home to manufacturers from different segments, such as equipment manufacturers, material and component suppliers, engine producers, and whole system integrators. - However, there is still significant demand from the automotive aftermarket, which is expected to increase the demand for refrigerants from the automotive industry in the coming years. - The German economy is estimated to take a major hit due to the ongoing COVID-19 impact, due to expected production halts and decreasing investments due to the ongoing lockdown situation in the country. The low GWP refrigerants market in the country is expected to recover only after the country shows positive economic growth post-2020.
Competitive Landscape The global low GWP refrigerants market is partially consolidated in nature, with intense competition among the top players to increase the market share. The top five players account for a major chunk of the global market. The global low GWP refrigerants market is dominated by Honeywell International Inc., The Chemours Company, Orbia, Linde, and Arkema Group, among others.
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