The Products We Sell Have a Huge Impact on Global Warming. That is Why...
I am representing a company that provides Air-Conditioning subscription service in Tanzania.
This is a service in which Daikin ACs are provided free of charge for the initial cost (equipment cost), and paid subscription fees in either daily, weekly, or monthly options to use. (*Installation fees will be charged.)
Daikin ACs are highly energy efficient and can reduce electricity bill by an average of 60% compared to the local popular products. Our business can save money on daily electricity bills and have the savings to be used for subscription fees without difficulty.
Impact on Global Warming
This book lists 80 measures to solve global warming.
Among them, the ranking is presented in order of the effectiveness of the measures.
“Refrigerant Management” has been ranked first. （ACs use refrigerants to warm or cool rooms.）
Our business handle products with a huge environmental impact in this way.
I’m not an environmentalist myself. I'm not a good person, unfortunately, because I'm the kind of person who has never gone to school being concerned about environmental issues, and I'm the kind of person who says that all garbage, burnable and non-burnable, can be burned.
However, as the head of a company handling products with a huge environmental impact, we conduct our business with a sense of mission to fulfill our social responsibilities.
Current Situation of AC Industry
The current state of the air conditioning industry is the reason why it is the number one most effective measure against global warming.
1. Significant increase in demand for AC
The number of ACs in operation will triple from 2020 to 2050. In addition, much of the increase in demand will come from developing countries.
２. Lack of progress in environmental regulations in developing countries
As a matter of course, the priority for developing countries is economic growth.
Even if the developed countries try to enforce environmental regulations on the developing countries, it is not reasonable for the developed countries, which have grown by imposing environmental burdens, to impose environmental regulations on the developing countries. It is, of course, unacceptable for developing countries as well.
In Tanzania, of course, there are no energy efficiency labeling or refrigerant regulation for ACs, and since ACs are disposed of without being recycled, 100% of the refrigerant ends up being released into the atmosphere.
3. Products with high environmental impact are popular
Due to the reason mentioned in 2. above, before a customer buys AC, only two things can be checked: “price and brand.” Customer cannot compare because no indication of power consumption.
In such situation, if a $400 AC and an $800 energy-saving AC are being sold side by side, it is obvious that the $400 AC will be chosen.
Also, even if customers know that the electricity cost of energy-saving ACs is low, very few customers in developing countries can afford the initial investment of $800.
In view of the above circumstances, there is no incentive for government, manufacturer and customer to promote the use of AC with low environmental impact.
Government: want to make its people happy by prioritizing economic growth over environmental regulations.
Manufacturer: want to make money by selling more and more of the best-selling ACs with cheap price.
Customer: want to buy ACs that are as cheap as possible.
My guess is that if this situation continues, “Even in 2050, AC with low environmental impact will not become widespread.”
Baridi Baridi’s subscription business aims to be a game changer in this situation.
If we succeed and make AC with low environmental impact become widespread naturally, it could be a major weapon against global warming.
Efforts to Reduce Environmental Impact
Let me explain and embody our efforts to reduce environmental impact through the AC subscription business.
Our efforts to reduce environmental impact can roughly be divided into two.
The first is “Energy efficiency” and the second is “Refrigerant control”.
First, let me explain about “Energy efficiency”
Baridi Baridi’s AC can reduce electricity bill by an average of 60% compared to the local popular products in Tanzania. Customer pays about $500 year for electricity bills for AC which turns into $200.
Rather than buying a cheap AC and pay for high electricity bills and maintenance cost, the customer's financial burden can be reduced by using an AC subscription with high energy efficiency.
Also, as long as customer pays the installation cost for $80, customer can start their subscription. This means customer can start using the AC at a much lower initial cost than purchasing one.
This is a little off the topic, but the keys to become widespread is how much the electricity bills can be reduced.
For this reason, we are choosing the most energy efficient model for our subscription business, which was never been sold in developing countries.
Our challenge is to "popularize the most expensive ACs in developing countries where only the cheapest ACs are sold."
Next is the crucial point: "Refrigerant control."
There are two approaches to reducing mass emission of refrigerant to the atmosphere.
1. Prevent refrigerant leakage due to installation
2. Recover refrigerant at disposal
From April of this year, we started the installation with our own installation team. Before then, we had asked an outside installation company.
In the case of Tanzania, if you call 10 contractors, 5 out of 10 will not come on the promised day, 4 will do the unreasonable installation, and 1 is right. That is the current situation.
The reason for not coming is that contractors can't borrow the tools. They don't have enough money to buy their own tools, so they pay someone else to borrow. If they can't borrow tools at that time, they won't come at the last minute.
Under such situation, there are many installation errors. In my experience,
1 out of 5 units had refrigerant leakage due to this error.
At Baridi Baridi, two measures are taken to prevent refrigerant leakage.
1. Human resources education
We hire Tanzanian personnel who have graduated from vocational training school (VETA), and employees dispatched from Daikin will provide lecture on installation techniques.
Also, in collaboration with JICA, we are preparing a project to develop a curriculum for vocational schools in Tanzania, aiming to raise the level of AC technicians.
2. Introduction of tools by Japanese manufacturers
There is an important process called flare fitting in the installation process.
This is the process of processing a copper tube into a trumpet shape so that the copper tube can be connected. If this process cannot be done right, it will cause refrigerant leakage.
Left: Copper tube processed by Japanese manufacturer's tools
Right: Copper tubes processed by locally available tools
Education is of course important, but the tools used are also important. If you can use good tools with proper knowledge, the possibility of refrigerant leakage is almost zero.
For many AC engineers who can't even buy their own tools, the option of buying good quality tools is not realistic. (By the way, it is more profitable for AC engineers to be inquired again due to refrigerant leak.)
The next step is to recover the refrigerant at the time of disposal, after reducing the refrigerant leakage due to installation.
In Tanzania, there are almost no cases where the refrigerant is reliably recovered at the time of disposal. Even in Japan, the refrigerant recovery rate is about 40%, and the current situation is that recovery is not properly done.
A large chemical plant would be required to recover and recycle the refrigerant. This is because a distillation process in a chemical plant is required to properly separate and recover the various types of refrigerants.
In developing countries, building this non-profitable chemical plant is not a realistic option.
However, what happens if we restrict the recovery to one type of refrigerant?
No chemical plant would be needed.
It can be recovered with a simple portable refrigerant recovery machine.
Baridi Baridi uses only R32, that is a refrigerant with a relatively low environmental impact and does not use any other refrigerant. In addition, Baridi Baridi own the AC, not the customers, because we operate as a subscription business. Therefore, the refrigerant can be recovered in-house.
We believe that AC subscriptions are the only way to achieve a 100% refrigerant recovery rate.
“Reduction of power consumption: 60%”
“Refrigerant recovery rate: 100%”
We believe that if we can achieve the above, our business model can be a great weapon against global warming.
To Expand AC Subscription to the World
Our business has just started in Tanzania.
It will not be a weapon to control global warming just by proceeding it alone by ourselves.
Therefore, Baridi Baridi will strengthen the following three efforts.
1. Monetization of environmental efforts
In order to expand these efforts in capitalism, environmental efforts must be profitable. Efforts at the expense of the company alone will not be a sustainable effort. In addition to monetizing the subscription business, we will also monetize our environmental efforts.
2. Attract environmental investment
AC subscription is a business that requires a lot of money. Business expansion is always accompanied by financial problems. From the perspective of environmental investment, we will actively search for partners who can support us financially.
3. Search for business management partners
We want companies other than Baridi Baridi to work more and more on the AC subscription business. We will continue to search for business partners who can consider collaborating in countries other than Tanzania and build a collaborative system.
We are looking for collaborative partners who can sympathize with our values and efforts in carrying out these efforts. Also, when we have an opportunity to contact any of you, we would greatly appreciate if you could consider giving us the opportunity to tell our ideas.
We are trying to create successful examples that balance “profit” and “social impact”. We believe that if a small company like us can succeed, the impact will spread to many other companies. We will steadily move forward step by step to create successful examples.