EU F-Gas regulations – F-Gas Producers, Importers & Exporters

F-Gas Producers, Importers & Exporters

This guidance is for organisations affected by the 2014 EU F-Gas Regulation (517/2014). The F-Gas
Regulation creates controls on the use and emissions of fluorinated greenhouse gases (F-Gases)
including HFCs, PFCs and SF6. The 2014 EU F-Gas Regulation replaces the 2006 Regulation,
strengthening all of the 2006 requirements and introducing a number of important new measures.

A crucial aspect of the 2014 Regulation is the introduction of the phase down in the supply of HFCs
within the EU market. The phase down process has a significant impact on those companies that
produce, import or export bulk HFCs. This Information Sheet provides guidance on new requirements
that affect the bulk F-Gas supply industry in the EU.

The HFC Phase Down Process

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


A key feature of the 2014 F-Gas Regulation is the introduction of a phase down in the quantity of HFCs
than can be placed on the EU market. The proposed phase down will lead to a 79% cut in current
levels of HFC sales by 2030. This is a very significant cut and requires strong controls on the companies
that place bulk supplies of HFCs on the EU market.

The phase down process is described in detail in Information Sheet 28.

Key features are:
a) It is a phase down not a phase out. 21% of current sales can be placed on the market after 2030.
b) It is based on a “GWP1
-weighted” process, which will encourage the rapid phase down of the
highest GWP HFCs.
c) The phase down is based on a series of cuts in supply from a “baseline”, which is the average
consumption of HFCs on the EU market during the years 2009 to 2012. The baseline amount is
183 million tonnes CO2 equivalent.
d) A quota system will be introduced to control sales in the EU market. The quota system will affect
all HFC producers, importers and exporters.
e) There are comprehensive annual reporting requirements so that the European Commission can
monitor and control the phase down.
f) There are a number of exemptions from the phase down.
g) The quota system is based on control of bulk HFC production, import and export. There are
additional controls for import of pre-charged products.

The HFC Phase Down Regulations

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


 

In the 2014 EU F-Gas Regulation the following Articles are of key importance to F-Gas producers,
importers and exporters:

• Article 15 introduces the phase down. It places controls on producers and importers to
ensure that the total quantity of HFCs that each of them places on the EU market does not
exceed the quota allocated to them. The phase down steps are given in Annex V.
• Article 15 also lists 6 exemptions from the phase down and describes a process for agreeing
further short-term exemptions should they be required.
• Article 16 describes the quota system. In particular it states that quotas will be allocated to
those companies that reported production and imports during the baseline period
(“incumbents”) and that some of the quota would be allocated to “new entrants”. The
detailed methodology for allocation of quotas is given in Annex VI.
• Article 17 describes the Registry that will be used to monitor and control the production and
import of HFCs in the EU.
• Article 18 describes rules for transfer of quota between companies.
• Article 19 specifies the annual reporting requirements, with further details given in Annex VII
and Commission Implementing Regulation 1191/2014.

The Annual Maximum Allocation

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


 

The amount of HFCs that can be placed on the EU market each year is defined as a percentage of the
baseline amount, as listed in Annex V of the Regulation. The average baseline amount (for the period
2009 to 2012) is 183 million tonnes CO2 equivalent. In 2015 the market will be capped at 100% of this
amount. In 2016 only 93% of the baseline can be placed on the EU market. Following a series of cuts,
the amount available from 2030 will be 21% of the baseline amount. Allocation of HFC Sales Quotas
The phase down process is being implemented via a sales quota system. Only companies with an
official HFC quota, received from the European Commission, will be allowed to produce HFCs or import
them into the EU.

• It will be illegal for quota holders to produce or import more than their allocated quota
• It will be illegal to produce or import HFCs without a quota.

Under the 2006 Regulation there was a legal requirement to report production, imports and exports
of HFCs and other F-Gases on an annual basis. For 2015, 89% of the quotas (i.e. 89% of 183 MT CO2
baseline amount) are being allocated to the companies that reported production or imports of HFCs
during the baseline period (2009 to 2012). These quota holders are referred to in this guidance as
“incumbents”. The allocation is being made to incumbents is in proportion to their average share of
the market in the 4 year baseline period. For example a company that sold 10% of the total EU HFC
sales in 2009 to 2012 will get 10% of the amounts available for incumbents. In 2015 there will be 79
incumbents, although it is important to note that the majority of the quotas will go to 5 companies
that were the dominant producers and importers in the baseline period.

A small proportion (11%) is allocated to “new entrants”. New entrants can apply for an amount that
they would like to receive and will be given an allocation based on the amount they asked for and the
number of other companies that applied for a new entrant allocation. A large number of companies
applied for the 2015 new entrant allocation. As the allocation was significantly oversubscribed, most
of the 334 valid new entrants will receive the same fairly small quota allocation for 2015 (in the region
of 65,000 CO2e, which is equivalent to around 16 tonnes of HFC 404A).

The new entrant allocations will be made annually. Every 3 years there will be a recalculation of
quotas, with current new entrants being merged with the incumbents, to allow further new entrants
to join the market. Each recalculation will be made on the basis of the annual averages of the
quantities placed on the market from the 1st January 2015.
Quotas shall only be allocated to producers or importers which are established within the EU, or which
have mandated an “only representative” established within the EU for the purpose of compliance with
the requirements the F-Gas Regulation. The only representative may be the same as the one
mandated pursuant to Article 8 of Regulation (EC) No 1907/20062

Exemptions from the HFC Phase Down

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


 

The following exemptions allow some trade in HFCs outside of the quota system:
a) HFCs imported into the Union for destruction
b) HFCs used by a producer in feedstock applications or supplied directly by a producer or an
importer to undertakings for use in feedstock applications
c) HFCs supplied directly by a producer or an importer to undertakings, for export out of the EU
where those HFCs are not subsequently made available to any other party within the EU, prior
to export d) HFCs supplied directly by a producer or an importer for use in military equipment
e) HFCs supplied directly by a producer or an importer to an undertaking using it for the etching
of semiconductor material or the cleaning of chemicals vapour deposition chambers within
the semiconductor manufacturing sector
f) from 1st January 2018 onwards, HFCs supplied directly by a producer or an importer to an
undertaking producing metered dose inhalers for the delivery of pharmaceutical ingredients
g) Imports of less than 100 tonnes CO2e per year are allowed outside of the quota mechanism.
This is a very low threshold, equivalent to approximately 25 kg of HFC 404A.
It is important to note that these exemptions apply to direct sales by a quota holder to an exempted
end user. The sales cannot be via 3rd parties in the HFC supply chain.

The EU HFC Registry

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


 

The European Commission has set up a Registry to monitor and control the quota system.
Registration in the registry shall be compulsory for the following:
a) producers and importers with an HFC quota (i.e. incumbents and new entrants)
b) undertakings to which a quota is transferred (see Section 8 on transfers)
c) producers and importers supplying, or undertakings in receipt of HFCs for the exempted
purposes listed in points (a) to (f) of Section 6 above
d) importers of equipment placing pre-charged equipment on the market where the HFCs
contained in the equipment have not been placed on the market prior to the charging of that
equipment.
The Commission shall ensure that registered producers and importers are informed via the registry
about the quota allocated and about any changes to it during the allocation period. The competent
authorities, including customs authorities, of the Member States shall have access, for information
purposes, to the registry.

Transferring quotas to another company

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


 

Any incumbent quota holder may transfer in the registry that quota for all or any quantities to another
producer or importer in the EU or to another producer or importer which is represented in the EU by
an only representative.

Any incumbent quota holder or undertaking to whom a quota has been transferred (as described in
the paragraph above) may authorise another undertaking to use its quota for the purpose of
producing pre-charged equipment outside the EU for subsequent import into the EU (see Section 10
below).

New entrant quota holders are not allowed to transfer their quotas. New entrant quota holders may
only authorise another undertaking to use its quota for the purpose importing pre-charged equipment
provided that the corresponding quantities of HFCs are physically supplied by the authorising producer
or importer.

Annual reporting requirements

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


 

All producers, importers and exporters of HFCs (as listed in Annex I of the Regulation) and of other
gases listed in Annex II of the Regulation, must annually report data to the Commission.

Imports of Pre-charged Equipment

EU F-Gas regulations – F-Gas Producers, Importers & Exporters


 

From 2017 onwards, any refrigeration, air-conditioning or heat pump equipment imported into the
EU that is pre-charged with HFCs, must use HFCs obtained from the EU quota. Importers will need to
prove to the authorities that the equipment they import complies with this requirement.

Non-EU manufacturers will have the option of:

a) Purchasing their required HFCs from an EU quota holder (the quota holder would deliver
actual HFC fluids to the non-EU manufacturer)
b) Obtain an authorisation from an EU quota holder to use a specified amount of their quota (the
non-EU manufacturer will then be able to source the actual HFC fluid from a local supplier)
EU-based manufacturers of pre-charged equipment can only use HFCs from the EU quota to precharge
their products.

Exports of Bulk HFCs and Pre-charged Equipment Exports of bulk HFCs are outside the EU quota mechanism. If a quota holder exports some of their product, it does not count as “placing on the EU market”. If a quota holder sells HFCs to a 3rd party who then exports the bulk gas, that quantity does not count towards the quota holder’s allocation providing that the 3rd party exporter informs the quota holder that the gas is for export. Both parties must report the export transaction to the Commission.

Exports of pre-charged equipment manufactured in the EU are included within the quota system. This
means that HFCs used by an EU manufacturer of pre-charged equipment must be purchased on the
EU market from the quota system.

There is a customs procedure available (inward processing relief) that might allow an EU equipment
manufacturer to import HFCs outside of the quota mechanism, providing it is identified as gas that is
to be used to charge equipment that will be exported.

The SRAC industry and the world as a whole, now understand that fluorinated gases have a potentially devastating global warming effect when released into the atmosphere.

F-Gas regulations have been implemented in order to contain, prevent and thereby reduce emissions of fluorinated greenhouse gases.

On 2nd April 2008, the Commission Regulation 303/2008 set out the requirements for a company certification scheme.

This scheme is specifically for businesses working with F-Gas refrigeration, air-conditioning and heat pump equipment containing or designed to contain fluorinated greenhouse gases.

These F-Gas Certification requirements are in accordance with Article 5.1 of EC Regulations 842/2006 on certain fluorinated greenhouse gases (the EC F-Gas Regulation).