Economic Impact of Kigali Ratification & Implementation. May 3, 2018

Transcription

1 Economic Impact of Kigali Ratification & Implementation May 3, 2018

2 US Industry Segments (Fluorocarbons) Fluorocarbons are used in commercial HVAC, residen5al HVAC, commercial refrigera5on, household appliances, and motor vehicle air condi5oning Insula5ng foams, medical metered-dose inhalers, aerosols, and several other applica5ons make up the remainder of the manufacturing sector American-made products that preserve the health, safety and comfort of our daily lives 2

3 US Industry Objective US industry strongly supports ra5fica5on of Kigali Amendment to the Montreal Protocol and domes5c implementa5on Hea5ng Ven5la5on Air Condi5oning and Refrigera5on (HVACR) and Fluorocarbon technologies are signature American technologies The Kigali Amendment provides a global plajorm for gradual introduc5on and commercializa5on of next genera5on technologies in the US and in the rapidly expanding global market Analysis indicates that implementa5on of the Kigali Amendment is good for American Jobs, the balance of trade and con5nued American technology leadership We urge the Administra9on to submit the Kigali Amendment to the US Senate 3

4 US Manufacturing Impact Fluorocarbons in the American Economy Jobs 589K direct HVACR employment $39B in payroll $205B in sales 2.5M total employment impact Output $621B in economic output, including manufacturing, distribu5on, service & installa5on (includes supply chain and induced demand) Manufacturing $178B contribu5on 671K jobs, dominated by HVACR equipment Downstream contrac5ng, wholesale, and service make up the rest Induced $290.1 TOTAL OUTPUT, 2016 (BILLION $) Total $621.7 Indirect $126.5 Direct $205.2 This industry is a significant contributor to American jobs, trade & economic output 4

5 US Industry Segments Manufacturing and Downstream Output Current manufacturing output is $56.7B Downstream output in the wholesale, contrac5ng, and repair and maintenance sectors is almost 3X that of manufacturing Manufacturing + Downstream (Billions $) Manufacturing Shipments (Billions $) HVACR Repair/Maintenance $5.5 HVACR Installa9on $55.6 Appliances $5.8 Foams $5.3 Distribu9on $87.4 Manufacturing $56.7 HVACR Equipment $27.0 Vehicle AC $7.6 Medical Aerosols Other $9.5 Flourocarbons $1.5 Downstream output is almost 3X the size of the manufacturing output 5

6 US Industry Segments Employment Current manufacturing impact is 138.4K jobs Direct Industry Employment (Thousands) Manufacturing Employment 2016 (Thousands) HVACR Installa9on Manufacturing Fluorocarbons 2.9 Vehicle AC 15.7 Appliances 16.7 HVACR Equipment 75.9 Maintenance & Repair 38.6 Distribu9on Medical, Aerosols, Other 11.9 Foams 15.2 Downstream employment is over 3X the size of the manufacturing employment 6

7 US Industry Growth Prospects Over the next 10 years Interna5onal HVACR market expected to more than double The cumula5ve global market will be over $1 trillion Developed countries are already transi5oning to new technologies Developing countries will transi5on away from ozone-deple5ng substances and this transi5on is at its apex between now and 2047 Foams, medical applica5ons and aerosols also have large global growth opportuni5es American Innova5on Commercializa5on of next genera5on technology is essen5al at this point in the Montreal Protocol transi5on The US HVACR industry has tradi5onally led these transi5ons and it is vital they lead this transi5on Typical design cycle for the industry is 5-10 years, decisions being made now American industry must lead the transi9on to new technologies to be compe99ve 7

8 Kigali Ratification Impact 2027 Manufacturing Jobs Current manufacturing impact is 138.4K jobs Kigali ra5fica5on increases direct manufacturing jobs by 33K Manufacturing growth translates into an incremental 150K jobs economy-wide Direct Economic Output Kigali ra5fica5on improves direct manufacturing output by $12.5B Total increased output of $38.8B versus no ra5fica5on scenario Trade Balance Posi5ve impact on balance of trade Manufacturing impacted directly Thousnad Persons Without Kigali With Kigali Direct increase 33K Manufacturing jobs w/ Kigali ra9fica9on Kigali Amendment ra9fica9on essen9al to jobs growth, industry growth, trade balance 8

9 Kigali Ratification Impact Global Trade Global Trade Impacts Kigali ra5fica5on will increase US supply to global HVACR markets by $5.0B Kigali will inhibit growth of old technology HVACR imports by $6.5B Fluorocarbon manufacture adds $1 billion in net trade benefit Billion $ U.S. HVACR Exports Without Kigali With Kigali Kigali Amendment ra9fica9on will grow US exports and improve balance of trade Billion $ U.S. HVACR Imports Without Kigali With Kigali

10 Kigali Ratification Impact HVACR Global Export Market The HVACR global export market will grow by 6% per year to meet needs of China, India, La5n America, and Africa With Kigali, US exports will outperform, increasing US share of global market from 7.2% to 9.0% Without Kigali, exports will underperform 10% 9% 8% 7% 6% U.S. Share of World HVACR Export Market 7.2% % 6.2% Without Kigali With Kigali US is a net importer, but gains share of global market with Kigali Amendment Ra9fica9on 10

11 Kigali Ratification Impact Refrigerant Production & Reclaim Fluorocarbon manufacturing would benefit from increased exports if Kigali is ra5fied and suffer from imports of older refrigerants if not $1B net benefit included in analysis Reclaimed HFCs with Kigali ra5fica5on are es5mated to increase reclaim sales by $0.8 billion and add almost 4,000 jobs. (not included in totals) 11

12 HVACR Technology & Investment The American HVACR industry led global innova5on, which is driven by domes5c demand Investments in next genera5on refrigerants and equipment technologies are already underway In 2015, AHRI members represen5ng 90% of US HVACR manufacturing commiged $5B through 2025 in R&D and capital investment to commercialize high efficiency equipment using next genera5on refrigerants American investments in R&D and capacity for Kigali-related growth will generate 1,400 addi5onal jobs and $1B in capital investment if Kigali is ra5fied Without Kigali ra5fica5on, manufacturing and R&D for new technologies will move to interna5onal markets to meet local demand for new technologies Kigali Amendment ra9fica9on essen9al to maintain and expand American leadership 12

13 Economic Analysis Background Inforum and JMS Consul5ng contracted to assess industry size and conduct scenario analysis All segments of fluorocarbon using and producing industry assessed; focus on HVACR. Direct industry size based on Economic Census data and industry interviews Indirect and Induced impacts es5mated with Inforum models Growth based on economic models and industry input Kigali projec5ons derived from interviews and surveys of industry experts Reported results are consensus projec5ons Inforum has 50 years experience in applying industry modeling tools to improving business planning, informing policy analysis, and furthering the general understanding of the economy and economic data. Inforum s modeling tools are par5cularly well-suited to addressing ques5ons that have both macroeconomic and industry impacts. Examples of Inforum projects include: analysis of tariffs and trade, evalua5on of tax reform, evalua5ng future scenarios of natural gas and industrial compe55veness, as well as understanding the general impact and contribu5on of specific industries. 13