Should competitors be able to join forces to fight climate change? This is exactly what DuPont and Honeywell did. In response to a 2006 European Union directive, they banded together to tackle the scientific obstacles of inventing a commercially viable low global warming potential (GWP) refrigerant.1 As two of the largest refrigerant chemical producers in the world, DuPont and Honeywell came to the realization that they needed to join their research and development resources in order to meet new European regulations. Racing against time, DuPont and Honeywell successfully developed a new class of commercially viable refrigerants called Hydrofluoroolefins (HFOs). These HFOs had not just a low GWP, but an ultra-low GWP. For example, Honeywell’s product boasted a 99.7 percent reduction in GWP compared to its next best refrigerant that was currently in use. 2 Once the science behind HFOs was proven, the two companies parted ways to pursue further product refinement and separate paths to production and commercialization. This breakthrough was just in time to meet an aggressive European Union directive requiring all new cars to use low GWP refrigerants by 2011.3
It may seem surprising to see such a coordinated effort to seek a product that would directly compete with the very products DuPont and Honeywell were currently producing. Why was the chemical industry willing to cannibalize this multi-billion dollar industry, while opposing stricter regulation in the cases of oil and coal? In a competitive environment with expiring intellectual property, DuPont and Honeywell saw an opportunity to do greater good while also making a healthy profit. The combination of the regulatory environment demanding new science and patents promising dividends on this science helped create an incentive for these companies to fight climate change.
The refrigerant industry had not always been receptive to such environmental pressures. Long before HFOs, chlorofluorocarbons (CFCs) were used in air-conditioning and refrigeration. However, scientists connected CFC emissions to ozone layer depletion. The chemical industry first resisted these claims. 4 Later though, they embraced the phase-out of CFC production, and in 1988 DuPont was the first company to announce their commitment to a total phase-out of CFCs. 5 CFCs were later replaced by hydrochlorofluorocarbons (HCFCs) and hydrofluorocarbons (HFCs), prompted by the 1987 Montreal Protocol. It is surprising to remember that only a few decades ago, scientists and environmentalists cheered the adoption of these alternatives. Thought the ozone problem was solved, a different problem became apparent. HFCs had a thousand times the GWP of carbon dioxide and were contributors to global climate change. 4 In the 2000’s, pressure mounted for the phase-out of HFCs. Just last month in a heralded action to fight global warming, 140 countries agreed to phase out HFCs in an amendment to the 1987 Montreal Protocol. This time though, Honeywell and DuPont (now in the form of its spin-off Chemours) were on the forefront. These companies were driving this regulatory change. In fact, Honeywell was one of the first companies to advocate for the amendment. 6
Can the unique collaboration of DuPont and Honeywell be replicated to other industries? While this successful story showed how companies can create successful products and then push for global regulations that both benefit the environment and these companies, it does raise antitrust concerns. Other competitors complained and the European Union did open an antitrust probe into agreement between DuPont and Honeywell. Although this did not come to fruition, such collaborations must be carefully regulated so they do not restrict competition in the market. The story of the refrigerant industry shows that regulation can drive innovation, even among competitors. If we are going to solve climate change before it is too late, then companies need to think differently, act now, and join together to rise to the occasion.
1 Alex Barker, “Honeywell and DuPont hit by EU antitrust,” Financial Times, October 21, 2014, https://www.ft.com/content/dfc06f48-592c-11e4-a722-00144feab7de, accessed November 2016.
2 Low GWP Hydrofluoroolefins (HFO) Reducing the Impact on Climate Change, from Honywell website, https://www.honeywell-refrigerants.com/india/?document=reducing-the-impact-on-climate-change-low-gwp-hydrofluoroolefins-hfo&download=1, accessed November 2016.
3 Laurence Norman, “EU Probes Honeywell, DuPont in Refrigerant Case,” Wall Street Journal, December 16, 2011, http://www.wsj.com/articles/SB10001424052970204553904577102333912517216, accessed November 2016.
4 Hiroko Tabuchi and Danny Hakim, “How the Chemical Industry Joined the Fight Against Climate Change,” New York Times, October 16, 2016, http://www.nytimes.com/2016/10/17/business/how-the-chemical-industry-joined-the-fight-against-climate-change.html, accessed November 2016.
5 E. I. du Pont de Nemours and Company, “DuPont Position Statement on HCFCs and HFCs,” http://www.dupont.com/corporate-functions/our-company/insights/articles/position-statements/articles/hcfcs-hfcs.html, accessed November 2016.
6 Alexander Ovodenko, “140 countries will phase out HFCs. What are these and why do they matter?,” Washington Post, November 3, 2016, https://www.washingtonpost.com/news/monkey-cage/wp/2016/11/03/140-countries-will-now-phase-out-hfcs-what-are-these-and-why-do-they-matter/, accessed November 2016.