Natural Refrigerants Market Size, Share, Forecast, & Trends Analysis by Refrigerant Type (Ammonia, Carbon Dioxide, Hydrocarbon), Application (Refrigeration, Air-conditioning), End User (Residential, Industrial, Commercial), and Geography - Global Forecast to 2031

Natural Refrigerants Market Size & Forecast

The Natural Refrigerants Market is expected to reach $2.3 billion by 2031, at a CAGR of 5.9% from 2024 to 2031. The growth of this market is driven by the rising demand for natural refrigerants for air-conditioning applications, stringent government regulations concerning synthetic refrigerants, and the low environmental impact of natural refrigerants compared to synthetic refrigerants.

Moreover, the rising awareness about environmentally friendly refrigerants and technological advancements in cooling equipment are expected to create market growth opportunities.

Natural Refrigerants Market Growth Drivers

Rising Demand for Natural Refrigerants for Air-conditioning Applications

Air conditioners play a crucial role in enhancing indoor air quality and fostering a healthier atmosphere. As economies develop, particularly in nations with warm climates like India, individuals have greater disposable income, enabling them to invest in AC units despite the associated electricity expenses. These air conditioners create a comfortable environment, driving their adoption. Furthermore, the introduction of residential air conditioners with advanced features such as corrosion resistance, auto humid control facilities, and copper condensers is anticipated to fuel the market’s growth.

Some of the developments in this market are as follows:

• In March 2022, Voltas Limited. (India) launched its PureAir Inverter AC powered with HEPA filter and PM1.0 sensor to strengthen its portfolio of cooling products and home appliances.
• In April 2022, Samsung Electronics Co., Ltd. (South Korea) launched its new DVM S2 Variable Refrigerant Flow (VRF) outdoor air conditioning unit that works with indoor AC units to provide wind-free cooling. This new model is ideal for apartments and residential complexes.

Thus, the rising demand for natural refrigerants for air-conditioning applications is expected to drive the market’s growth during the forecast period.

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Stringent Government Regulations Concerning Synthetic Refrigerants

Stringent government regulations on synthetic refrigerants are positively influencing the growth of the natural refrigerants market. These regulations advocate for environmentally friendly technologies like natural refrigerants in products such as air conditioners and refrigerators. They incentivize manufacturers to invest in research and development for AC units utilizing natural refrigerants, which have a lower environmental impact and are more energy-efficient.

Many governments globally are phasing out harmful refrigerants like hydrofluorocarbons (HFCs) due to their high global warming potential (GWP). This creates a demand for alternative refrigerants, including natural options like ammonia, hydrocarbons, propane, and carbon dioxide. For instance, in September 2023, the California Air Resources Board (U.S.) issued a Request for Information (RFI) to aid in the development of an assessment report specifying the transition of California's economy away from HFCs to ultra-low GWP or no-GWP alternatives by 2035. Such initiatives are expected to drive the growth of the natural refrigerants market during the forecast period.

Natural Refrigerants Market Opportunity

Rising Awareness About Environmentally Friendly Refrigerants

Government bodies and organizations are increasingly recognizing the environmental impact of traditional refrigerants and the advantages of eco-friendly alternatives, driving the demand for natural refrigerants in the manufacturing of AC units. Manufacturers, retailers, and HVAC technicians are actively raising awareness by promoting the use of natural refrigerants in their products and services. Retailers educate consumers about these options, while technicians inform homeowners about the benefits during installation and maintenance.

Furthermore, governments and environmental organizations are launching campaigns highlighting the environmental impact of refrigerants and the benefits of natural alternatives. Collaborations with industry associations, environmental groups, and consumer organizations amplify the reach of these campaigns. Government and organizational websites provide resources for consumers and businesses regarding information on available refrigerants, their benefits, and qualified technicians who service these systems.

In response to environmental concerns, many governments worldwide are implementing regulations to phase out the production and use of harmful refrigerants, leading to a shift towards eco-friendly alternatives. Additionally, government bodies are mandating clear labeling on appliances indicating the type of refrigerant used, enabling consumers to make informed choices. These factors are expected to offer market growth opportunities during the forecast period.

Technological Advancements in Cooling Equipment

Cooling equipment is experiencing a surge of innovation focused on efficiency, sustainability, and enhanced performance. Technological advancements are driving the development of safer components and system designs tailored for handling natural refrigerants. A significant trend is the transition towards natural refrigerants like ammonia, carbon dioxide, and hydrocarbons, which have minimal global warming potential (GWP) compared to conventional options.

With an increasing focus on sustainability, cooling equipment manufacturers are prioritizing energy efficiency. They are exploring eco-friendly materials and sustainable manufacturing processes to reduce the environmental impact of cooling equipment. Advancements in compressors, heat exchangers, and system design are enhancing the efficiency of natural refrigerants. Advanced technologies such as AI, sensors, and IoT integration enable the optimization of systems for natural refrigerants, resulting in enhanced performance and reliability. These advancements are driving the demand for natural refrigerants across a wide range of cooling applications, including domestic refrigerators and commercial freezers. These factors are expected to offer significant growth opportunities for companies operating in this market during the forecast period.

Natural Refrigerants Market Analysis: Key Findings

By Refrigerant Type: In 2024, the Hydrocarbon Refrigerant Segment to Dominate the Natural Refrigerants Market

Based on refrigerant type, the natural refrigerants market is segmented into ammonia refrigerant, carbon dioxide refrigerant, hydrocarbon refrigerant, propane refrigerant, and other refrigerants. In 2024, the hydrocarbon refrigerant segment is expected to account for the largest share of over 37% of the natural refrigerants market. This segment’s large market share can be attributed to the rising preference for eco-friendly solutions, the increasing demand for hydrocarbon refrigerants due to their low environmental impact, and the increasing utilization of hydrocarbon refrigerants in refrigerators and air conditioners. Additionally, the rising need for refrigeration across various sectors, such as food preservation, pharmaceuticals, and air conditioning, drives the demand for hydrocarbon refrigerants. In March 2024, BITZER Kühlmaschinenbau GmbH (Germany) launched its Orbit scroll compressor series designed for use with hydrocarbon refrigerants, catering to heat pumps, air conditioning, and IT cooling applications. Such initiatives by market players also contribute to the growth of this segment.

However, the ammonia refrigerant segment is projected to register the highest CAGR during the period. This segment’s growth can be attributed to the rising demand for ammonia refrigerants due to their zero ozone depletion potential (ODP) and negligible impact on global warming, government policies aimed at promoting energy efficiency and sustainable practices, and the increasing public awareness regarding the environmental benefits of ammonia. Moreover, market stakeholders are launching several initiatives in response to the growing demand for ammonia refrigerants. For instance, in August 2022, the Institute of Refrigeration (U.K.) signed a Memorandum of Understanding (MoU) with the International Institute of Ammonia Refrigeration (IIAR) (U.S.) to enhance collaboration on the use of natural refrigerants and to exchange information regarding the effective utilization of ammonia in cooling applications.

By Application: In 2024, the Refrigeration Segment to Dominate the Natural Refrigerants Market

Based on application, the natural refrigerants market is segmented into refrigeration, air-conditioning, and other applications. In 2024, the refrigeration segment is expected to account for the largest share of over 52% of the natural refrigerants market. This segment’s large market share can be attributed to the rising demand for refrigeration across various sectors, such as food preservation, pharmaceuticals, and cold storage, coupled with technological advancements in cooling equipment, resulting in the increased integration of natural refrigerants. For instance, in December 2023, EVAPCO, Inc. (U.S.) launched VersaSplit, a low-charge ammonia (R717) mega-split refrigeration system designed for the industrial sector.

However, the air-conditioning segment is projected to register the highest CAGR during the forecast period. This segment’s growth is driven by the increasing demand for energy-efficient air conditioners, a shift in consumer preferences towards eco-friendly solutions, and government initiatives aimed at promoting the adoption of natural refrigerants.

By End User: In 2024, the Industrial Segment to Dominate the Natural Refrigerants Market

Based on end user, the natural refrigerants market is segmented into residential, industrial, and commercial. In 2024, the industrial segment is expected to account for the largest share of over 45% of the natural refrigerants market. This segment’s large market share can be attributed to factors such as the increasing adoption of natural refrigerants in industrial facilities due to their lower energy consumption and cost-efficiency, the high demand for natural refrigerants in industrial processes such as food & beverage production, chemical manufacturing, and cold storage, and initiatives by companies in the industrial sector to reduce their environmental footprint.

However, the commercial segment is projected to register the highest CAGR during the forecast period. This segment's growth is driven by the growing demand for commercial refrigeration in commercial spaces such as food preservation, supermarkets, and cold storage facilities, government policies promoting energy efficiency and sustainable practices, and the increasing adoption of air conditioners in commercial spaces. In May 2023, Hoshizaki Corporation (Japan) launched 44 commercial refrigerators and 24 freezers that use natural refrigerants for commercial spaces.

Geographical Analysis

In 2024, the Asia-Pacific Region to Dominate the Natural Refrigerants Market

In 2024, Asia-Pacific is expected to account for the largest share of over 44% of the natural refrigerants market. Asia-Pacific’s significant market share can be attributed to the rapid pace of industrialization and urbanization, the surge in research and development activities dedicated to enhancing natural refrigerant systems, government regulations driven by mounting environmental concerns, and the rising preference for eco-friendly solutions. Japan and Australia are early adopters of natural refrigerants due to stringent regulations and proactive government measures. Furthermore, the market in Asia-Pacific is projected to register the highest CAGR of over 7% during the forecast period.

Natural Refrigerants Market: Key Companies

The report offers a competitive analysis based on an extensive assessment of the leading players’ product portfolios and geographic presence and the key growth strategies adopted by them over the past 3–4 years. Some of the key players operating in the natural refrigerants market are Airgas, Inc. (U.S.), Linde PLC (Ireland), Engas Australasia (Australia), Tazzetti S.p.A. (Italy), Puyang Zhongwei Fine Chemical Co., Ltd. (China), Shandong Yuean Chemical Industry Co., Ltd. (China), A-Gas International Limited (U.K.), Hychill Australia Pvt. Ltd. (Australia), Air Liquide (France), AGC Inc. (Japan), Danfoss A/S (Denmark), Evonik Industries AG (Germany), GTS SPA (Italy), Harp International Ltd. (U.K.), and Sinochem Holdings (China).

Natural Refrigerants Industry Overview: Latest Developments from Key Industry Players

• In March 2024, Panasonic Corporation (Japan) announced its plans to launch three new models of commercial air-to-water (A2W) heat pumps using environmentally friendly natural refrigerants for multi-dwelling units, stores, offices, and other light commercial properties.
• In October 2022, Daikin Europe NV (Belgium) launched two new products featuring natural refrigerants: the Monoblock of the Future and the CO2 ZEAS range. These products cater to commercial refrigeration solutions for sectors including food processing, warehousing, food retail, hospitality (HoReCa), and pharmaceuticals.
• In November 2023, Trane Technologies International Limited (Ireland) launched the Aries N air-to-water chillers, designed for a wide range of applications. These chillers feature natural refrigerants and offer a valuable alternative to old "high GWP" (global warming potential) HFC and NH3 chillers.

Natural Refrigerants Market Research Summary

Key questions answered in the natural refrigerants market report: