Brexit on HFC phase down agenda

Brexit on HFC phase down agenda

Refrigerant prices, illegal imports and the implications of Brexit on the quota system are some of the topics to be discussed at an important European Commission meeting next week.

Representatives of the air conditioning and refrigeration industry and environmental groups will meet with ministers from the Commission’s Directorate-General for Climate Action (DG Clima) to be briefed on the progress of the EU HFC phase-down and on the next implementation steps. This, the third meeting of the Consultation Forum, will also focus on developments of standards and training of personnel.

DEFRA and representatives from the UK groups have expressed a desire to stay within the European F-gas phase down mechanism, and the European Commission is said to be preparing for how the EU HFC quota system will operate once the UK leaves the EU.

The Commission recognises that reference values held by UK-based companies would need to be adjusted to exclude quantities placed on the UK market. Data is currently being collected to determine what the remaining EU27 market share amounts to. The adjusted reference value would allow UK-based companies to continue placing HFCs on the EU27 market post Brexit and would ensure the corresponding supply of HFCs to the EU27 market.

The Commission maintains that this approach is consistent with that for companies from other non-EU countries which currently hold a reference value.

Refrigerant prices

Prices and availability of refrigerants is also high on the agenda. The Commission says it is monitoring, on a quarterly basis, price developments in the sector. It accepts that prices for bulk gas were relatively stable until mid-2015 but increased substantially during the course of last year.

In briefing note to the meeting, it says it recognises that the price increases are clearly related to the GWP of the refrigerant and therefore reflects expectations that successive quota reductions would increasingly favour the use of low GWP HFCs and natural alternatives.

DG Clima observes that refrigerant prices have reached levels of €20/tCO2e, a price which, it says, is “fully within the range that was considered to be a proportionate contribution by this sector to the 2050 roadmap”.

It sees the existing price as “a good incentive for stakeholders to switch to low GWP technologies wherever and whenever possible, to prevent leakage and to reclaim gases”.

However, the Commission claims that this year’s reduction to 63% of the baseline may actually be less steep than feared by some stakeholders. It observes that in preparation for the inclusion of pre-charged equipment in 2017, equipment importers stocked up on authorisations to such an extent that there are currently enough unused authorisations available for over 18 months of equipment imports. The 63%, it argues, will therefore be mostly available for the import and EU production of bulk gases.

Illegal trade

Despite claims by some refrigerant manufacturers and suppliers, DG Clima says it has not found any evidence of large-scale illegal HFC imports.

To investigate the claims, DG Clima had commissioned an external company to examine available import data from the F-gas company reporting, the ECHA (REACH agency), Eurostat, UN Comtrade as well as Chinese export data. The investigation found no evidence that there had been any large-scale illegal activity in 2015 or 2016. Any variations between data sets were explained by the different accounting scopes (eg customs procedures included, destination country) and date effects (year-end carryover).