Natural Refrigerants Market Size, Share & Industry Analysis, By Type (Hydrocarbons, Ammonia, and Carbon Dioxide), By End-Use Industry (Industrial, Commercial, and Domestic), and Regional Forecast, 2024-2032

The global natural refrigerants market size was valued at USD 1.59 billion in 2023 and is projected to grow from USD 1.70 billion in 2024 to USD 2.81 billion by 2032, exhibiting a CAGR of 6.5% during the forecast period. Europe dominated the natural refrigerants market with a market share of 37.74% in 2023. Moreover, the natural refrigerants market size in the U.S. is projected to grow significantly, reaching an estimated value of USD 0.48 billion by 2032, driven by stringent government regulations to phase out harmful hydrofluorocarbon and hydro-chlorofluorocarbon refrigerants.

Natural refrigerants are created through biochemical processes. Ammonia refrigerants, carbon dioxide (CO₂) refrigerants, and hydrocarbon refrigerants are examples of simple natural refrigerants. Concerns about the environment have created a potential demand for the product. These products are derived from natural resources and therefore are environmentally friendly than conventional refrigerants. Artificial refrigerants cause a heavy toll on the ozone layer and escalate global warming. Due to the higher efficiency of the product, they can be effectively adopted as an excellent alternative for chlorofluorocarbons (CFC), hydro chlorofluorocarbons (HCFC), and hydrofluorocarbons (HFC).

Increase in product demand due to the negative effects caused by the use of HCFC and HFC based refrigerants is fueling the market growth. The product is widely used for refrigeration and air conditioning on a global level. The relatively high performance, lower cost, zero or no ozone depletion, and lesser leakage rate, makes ammonia a suitable refrigerant in the global market.

The COVID-19 outbreak has had a detrimental impact on every aspect of the global economy and the market is no exception. The refrigerants industry suffered its worst phase over the past few years due to the pandemic. The global refrigerants sector witnessed consequences such as the shortage of raw materials, logistic challenges, workforce shortage, and uncertainty leading to suspension or shutdown of manufacturing facilities. Fewer options to choose from, higher material prices, and delayed project cycles were among the few challenges faced by several stakeholders in the refrigerants industry. Moreover, ammonia and hydrocarbon manufacturing companies faced crippled demand and stalled business activities. Companies operating in the market had to adopt additional safety measures and maintain appropriate COVID behavior to safeguard their employees.

Natural Refrigerants Market Trends

Technological Advancements in Green Cooling to Create Opportunities for Market Growth

Nowadays, Green Cooling technologies are available and in use in many sectors. Natural refrigerants such as R600a (isobutene) and R290 (propane) are already used in 50% of newly produced refrigerators. Unitary air conditioning is the fastest-growing RAC subsector in many countries and is developing many positive changes. This is due to the inverter technology becoming more widespread as major producing economies such as China and India bring R290-based UAC systems to the market.

Major businesses are also choosing to employ green cooling technologies, especially because of their significant cost savings. For example, Coca-Cola has already acquired 1.7 million units free of highly climate-damaging hydrofluorocarbons or HFCs and reduced electricity use by up to 35% through intelligent energy management features.

As the demand for cooling increases, it is essential to employ climate-friendly and sustainable cooling solutions. Using the most energy-efficient technologies and the product with very low global warming potential (GWP), the “green cooling” approach minimizes the negative environmental impacts of RAC appliances and helps to save energy costs.

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Natural Refrigerants Market Growth Factors

Increased Awareness Regarding Environment-Friendly Refrigerants to Drive Market Growth

Natural refrigerants arise in biological and chemical cycles of nature without human intervention. Natural hydrocarbons, ammonia, carbon dioxide, water, and air are materials with zero or near-zero GWP and the capability to reduce energy, gas, and water use. One of the most efficient ways for reducing greenhouse gas emissions is to switch to refrigerants which are natural and that are better for the sustainable growth of the environment.

In recent decades, the impact of refrigerants on the environment has become a major issue. Indeed, with large holes in the cooling system, these fluids are destroying the ozone layer, increasing the greenhouse effect in the atmosphere, and directly contributing to the cause of global warming. The most trending refrigerants are the types of hydrocarbons that are propane (R290), propylene (R1270), butane (R600), and isobutene (R600a). Hydrocarbons can be used as long-term alternatives for residential air conditioning and heat pumping applications to boost productivity growth because they offer good performance and reasonable energy savings without causing any harm to the environment.

RESTRAINING FACTORS

Presence & Wide Acceptance of Synthetic Refrigerants to Restrict the Market Growth

The refrigeration industry has relied heavily on synthetic refrigerants. Hydrofluorocarbons (HFCs), chlorofluorocarbons (CFCs), and hydrochlorofluorocarbons (HCFCs) are synthetic refrigerants that are utilized most frequently in today's world. Because of their better efficiency than their synthetic counterpart, natural refrigerants are susceptible to decay growth.

They are not highly preferred for effective refrigeration of homes and small businesses. This is because they have high toxicity, corrosiveness, high pressures, flammability, or in some cases, lower operating efficiencies. As a result, the first synthetic refrigerants were developed after extensive research and development.

Due to technological limitations, synthetic refrigerants initially performed better than natural refrigerants. Stability is another advantage that synthetic refrigerants have over their natural content. These factors highly impacted the growth of the market across the global.

Natural Refrigerants Market Segmentation Analysis

By Type Analysis

Hydrocarbons Segment to Lead Owing to Excellent Product Properties

Based on type, the market is segmented into hydrocarbons, ammonia, and carbon dioxide.

The hydrocarbons segment is anticipated to remain the largest segment during the forecast period. Hydrocarbons are non-toxic refrigerants with no ozone-depleting potential and minimal impact on global warming. They are good for the environment and are as good as or better than HCFC or HFC refrigerants because of their excellent thermodynamic properties in most applications.

The ammonia segment is expected to witness a significant growth during the forecast period as it is a colorless gas at atmospheric pressure. It has zero ozone depletion, global warming potential.  In combination with its efficiency, it is one of the most environmentally friendly refrigerants.

Carbon dioxide is an environmentally friendly, non-toxic, and non-flammable natural refrigerant. With a GWP of 1, carbon dioxide is the reference value to compare the direct influence of different refrigerants on global warming. Carbon dioxide is obtained as a by-product of several production processes, hence is easily available for use as a refrigerant.

By End-Use Industry Analysis

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Industrial Segment to Dominate the Market Due to High Product Demand

Based on end-use industry, the market is segmented into industrial, commercial, and domestic.

These refrigerants are suitable alternatives to HFCs and HCFCs in commercial, industrial, transportation, and domestic sectors. The industrial segment is expected to dominate the market during the forecast period. The segment includes refrigeration systems used in large-scale industrial applications such as chemical manufacturing, pharmaceuticals, and food processing. Currently, carbon dioxide refrigeration technology is mainly used in three areas heat pumps, automotive air conditioning, and multi-stage refrigeration systems. Since carbon dioxide is an environmentally friendly refrigerant, carbon dioxide compressors have been developed and manufactured for various industries.

The commercial segment anticipates considerable growth during the forecast period. Commercial refrigeration systems used in supermarkets greatly impact Total Equivalent Warming Impact (TEWI) due to the long refrigerant lines and high refrigerant charges.

REGIONAL INSIGHTS

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Europe region held the largest natural refrigerants market share in 2023 in terms of value due to the growth in the commercial industry and a thriving automotive industry is boosting the growth in the European region. The manufacturers in the region have scaled up their production owing to the strong demand for air conditioners and refrigerating systems. With the tightening of European Union (EU) policies regarding using F-gases, switching to natural refrigerant alternatives in heat pumps to ensure future-proof, sustainable installations becomes even clearer. In April 2022, the European Commission planned a new amended version of the European Union F-Gas regulation targeting climate-damaging F-gases. The proposal tightens the timetable for phasing out HFCs (reducing the permitted quantity by around 98% by 2048 compared to 2015 levels). It introduces bans on new heat pumps and air conditioning systems. 

Asia Pacific region is the fastest-growing market in terms of CAGR. This is attributable to the increased product adoption in air-conditioning systems. Owing to the hot climate, there is a strong demand for air-conditioners in households. Also, owing to the cheap labor costs, companies are shifting their businesses to these regions.

In North America, the market is anticipated to rise due to stringent government regulations to phase out harmful hydrofluorocarbon and hydro-chlorofluorocarbon refrigerants. In the Middle East & Africa, the commercial industry has been prospering, which has fueled the demand for the market. Latin America is emerging at a slow rate owing to the dominance of artificial refrigerants in the region. The rapidly growing environmental pollution across the region and rising stringent regulations by governments in the U.S. and Canada are promoting the adoption of hydrocarbon natural resources where hydrocarbon refrigerants come into the picture. This refrigerant is known for its climate-friendly and non-toxicity nature, thereby surging its major adoption in heating and cooling products, such as domestic refrigerators & freezers and beverage dispensers.

List of Key Companies in Natural Refrigerants Market

Distribution Network Enhancement to Strengthen Market Share of Companies

The global market is competitive and moving toward fragmented with key players operating in the industry being Air Liquide, Linde plc, A-Gas International Ltd., HyChill Australia Pty Ltd, and engas Australasia.

Market participants are fiercely competing with international and regional players with extensive distribution networks, regulatory know-how, and suppliers. In addition, companies sign contracts, acquisitions, and strategic partnerships with other market leaders to expand their existing markets.

LIST OF KEY COMPANIES PROFILED:

• Air Liquide (France)


• Linde plc (Ireland)


• A-Gas International Ltd. (U.K.)


• HyChill Australia Pty Ltd (Australia)


• engas Australasia (Australia)


• Tazzetti S.p.A. (Italy)


• Shandong Yuean Chemical Industry Co., Ltd. (China)


• AGC Inc. (Japan)


• Puyang Zhongwei Fine Chemical Co., Ltd. (China)


• Danfoss (Denmark)

KEY INDUSTRY DEVELOPMENTS:

• March 2023 – Danfoss announced that it acquired BOCK GmbH, a carbon dioxide and low-GWP compressor manufacturer. BOCK GmbH has one of the largest portfolios of compressors for natural refrigerants such as hydrocarbons, CO2 (R744), and other low-GWP refrigerants. The deal will accelerate energy efficiency and the global transition to natural and low-GWP refrigerants.


• February 2023: Linde signed a long-term agreement and invested around USD 1.8 billion to supply clean hydrogen and nitrogen to OCI’s new world-scale blue ammonia plant located in Beaumont, Texas. The Beaumont facility aims to build and strengthen the world-leading blue ammonia and clean fuels platform.


• October 2022: A-Gas International Ltd. has announced that it has become a Climate and Ozone Protection Alliance (COPA) member. The joining aims to bring the cooling sector to more sustainable refrigerants and implement efficient refrigerant lifecycle management. The strategy will drive the growth of natural refrigerants and bring effective environmental solutions to the global market.

REPORT COVERAGE

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The global natural refrigerants market report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, types, and end-use industry. In addition, it offers insights into industry trends and highlights vital industry developments. In addition to the factors mentioned above, the report encompasses various factors contributing to the market growth in recent years. It further includes historical data & forecasts revenue growth at global, regional, and country levels and analyzes the industry's latest market dynamics and opportunities.

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