The wide-scale adoption of CO2 (R744) refrigeration technology in Japanese supermarkets would mark the biggest change to the country’s HVAC&R sector, according to Gaku Shimada, General Manager of the Condensing Unit Engineering Department at Panasonic.
“Convenience stores are already using CO2, and the cold storage market is shifting to natural refrigerants, so supermarkets are the biggest market we are looking at,” Shimada told NaturalRefrigerants.com in a recent interview. “We have to change that market.”
Panasonic’s commitment to transforming Japan’s refrigeration landscape is backed by 15 years of experience supplying CO2 outdoor condensing units (OCUs) to cold-chain businesses across the country. As of the end of 2023, the company had sold around 21,000 of its CO2 OCUs domestically. An additional 1,000 units have been sold so far this year, Shimada added, noting that market growth has not been as fast as the company had expected.
Convenience stores are leading the charge, with major chains adopting Panasonic’s CO2 OCUs.
“Convenience stores are already using CO2, and the cold storage market is shifting to natural refrigerants, so supermarkets are the biggest market we are looking at.”
Gaku Shimada, GM of the Condensing Unit Engineering Department, Panasonic
“As of today, we estimate Panasonic to have more than 70% of the CO2 market share of Japan’s convenience stores’ newly installed equipment and around 50% of the overall convenience store market,” he said. “Many big chains have started using CO2, but not extensively. If they started to use CO2 more widely, then the Japanese convenience store market would be mostly R744.”
Cold storage facilities are also a growing market for Panasonic’s CO2 OCUs, accounting for 10% of this year’s sales, Shimada explained. Due to the need for higher-capacity technologies, cold storage operators tend to favor Panasonic’s larger units, including its 40HP OCU, which was launched in 2022.
Panasonic has also made significant inroads in the cold storage sector by offering CO2 rack systems and OCUs. In late 2022, the company supplied 10 of its 80HP transcritical CO2 rack-based booster systems, and 15 20HP and two 15HP CO2 OCUs to Japan’s largest R744-based cold storage facility in Sendai.
Breaking down barriers
To unlock the supermarket sector, Panasonic and other manufacturers are working to reduce the upfront costs of CO2 technology and streamline the installation process. According to Shimada, the key challenge is convincing potential users that the energy savings from CO2 systems can offset their higher initial cost in several years.
“We are trying to convince users that the energy consumption of CO2 is less than HFCs,” he explained. “This is still not widely known in the market.”
Government subsidies are playing a crucial role in overcoming this barrier. In Japan, subsidies can cover up to 50% of the cost of installing natural refrigerant-based equipment, significantly reducing the payback period for businesses.
“Without subsidies, the payback period for CO2 systems is typically 5–8 years,” Shimada said. “With government support, the payback period can be almost zero.”
In June 2023, the Japanese Ministry of the Environment (MOE) announced that it would be extending the subsidy program through the 2027 fiscal year. The MOE also simplified the application process, making it more accessible to small- and medium-sized enterprises.
Shimada praised the government’s positive stance on natural refrigerants
“The Japanese government is positive about natural refrigerants and is always supporting us,” he said.
“Without subsidies, the payback period for CO2 systems is typically 5–8 years. With government support, the payback period can be almost zero.”
Gaku Shimada, GM of the Condensing Unit Engineering Department, Panasonic
