EU F-Gas regulations – The HFC Phase Down Process

The HFC Phase Down Process

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. This Information Sheet provides guidance on how the phase down process will
occur and the impact that this will have on the current market for HFCs.

Why an HFC Phase Down?

HFCs are used in a range of applications such as refrigeration, air-conditioning, heat pumps, foam
insulation and aerosols. HFCs are very powerful greenhouse gases – the most commonly used HFCs
have a global warming potential (GWP) between 1,000 and 4,000 times higher than CO2.
The HFC phase down is being introduced to drive the market towards use of lower GWP alternatives

Many lower GWP alternatives already exist and are “near market” but they are not in widespread use
in current HFC markets. The phase down will force technology change and make a substantial
contribution towards lower greenhouse gas emissions.

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 will only be achieved with widespread action from fluid suppliers, equipment and
product manufacturers, installation and maintenance contractors and end users.

It is important to note that this is a phase down not a phase out. 21% of current sales can be placed
on the market after 2030. This is because there are some end uses where there are currently no safe,
cost-effective or environmentally beneficial alternatives to HFCs.

The phase down is based on a series of cuts in supply from a “baseline”. It is based on a “GWPweighted” process, which will encourage the rapid phase down of the highest GWP HFCs. A quota system will be introduced to control sales in the EU market.

HFC Baseline

The baseline for the HFC phase down process is the average consumption of HFCs on the EU market
during the years 2009 to 2012. Under the 2006 EU F-Gas Regulation, all producers, importers and
exporters of F-Gases had to report annual data for quantities of bulk HFCs. The baseline is calculated
in terms of “CO2 equivalent2”. The baseline amount is 183 million tonnes CO2 equivalent.

Phase Down Steps

The phase down starts in 2015 with a series of cuts from the baseline amount.

It is worth noting:
– The start of the process is fairly gentle, with 100% of baseline sales allowed in 2015 and a 7%
cut in 2016 and 2017.
– There is a “hidden step” in 2017 as all imported pre-charged equipment must use HFCs from
the EU quota from 2017 onwards. Under business-as-usual this will add a further 11% to EU
demand. This makes the cut in 2017 equivalent to 18%.
– There is a very big cut in 2018. As shown in Figure 1, the cut is 37%. However, the pre-charged
imports must be taken into account – this makes the cut equivalent to 48%. It is clear that
HFC users are going to need to significantly reduce their demand by 2018 to avoid supply
shortages. Early action is vital!
– By 2024 the cut is nearly 70% and from 2030 onwards the cut is 79%.

A GWP Weighted Process

The annual quantities in the baseline and the phase down steps are based on “GWP tonnes”. This
means the physical tonnage of each gas sold multiplied by its GWP (global warming potential). This is
very important, as it will put most pressure on the refrigerants with the highest GWP. Table 1
illustrates the GWPs of a number of common HFCs.

Two commonly used HFCs are HFC 404A and HFC 134a. These have GWPs of 3,922 and 1,430 respectively. HFC 404A has a very high GWP – it is 2.7 times higher than the GWP of HFC 134a. This means that selling 1 kg of HFC 404A will “use up” 2.7 times as much of the allowed HFC allocation as selling 1 kg of HFC 134a.It is reasonable to expect that the prices of HFCs will rise considerably as supplies become constrained.

It is also reasonable to expect that this price rise will be GWP weighted – there will clearly be greatest
phase down pressures on HFC 404A and HFC 507.

The first 7 fluids in Table 1 are HFCs – these are all affected by the phase down. It is important to note
that there are many other HFCs not shown in Table 1 also affected. The last 4 fluids in Table 1 are not
affected by the phase down as they are not HFCs – they are included to illustrate some of the ultralow
GWP alternatives that are available.

An EU-Wide Process

It is important to be aware that the phase down process is for the whole EU. There is no guarantee
that UK will get pro-rata share of the phase down amounts.

The Sales Quota System

The phase down process is being implemented via a sales quota system. Only companies with an HFC
quota, received from the European Commission, will be allowed to produce HFCs or import them into
the EU. Most of the quotas are being given to the companies that produced or imported HFCs during
the baseline period (2009 to 2012). A small proportion (11%) is allocated to “new entrants”.

Imports of Pre-charged Equipment

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 must also use HFCs from the EU quota.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, the quota holder can receive an “export credit” providing the exporter
informs the quota holder about the amount exported.

Exports of pre-charged equipment are included within the quota system where the HFCs are
purchased on the EU market. However, an equipment manufacture is allowed to import HFCs for
filling into pre-charged equipment and subsequent re-export – this will be outside the quota
mechanism if the correct customs processes are used.

Responding to the Phase Down

The phase down will clearly put pressure on manufacturers and users of HFC based products and
equipment. To achieve the required cuts, users of HFCs will need to combine 4 strategies:

a) For existing refrigeration systems, consider the possibility of replacing high GWP refrigerant
with a “medium GWP” HFC. For example, use HFC 407F in place of HFC 404A. This will create
a 50% cut in GWP weighted demand. This is a realistic example as HFC 407F can often be
“retrofilled” into existing HFC 404A equipment.

b) For existing systems, reduce the quantity of HFCs used by reducing leakage. A good leak
reduction strategy can often reduce annual leak rates by at least 50%.

c) For new systems, carefully consider which HFCs to use. Very high GWP HFCs such as HFC 404A
and HFC 507 should be avoided immediately – there are virtually no refrigeration applications
that still need these high GWP refrigerants in new systems. If possible use one of the
“ultra-low” GWP refrigerants in Table 1 (e.g. ammonia, CO2, HFO 1234yf) – these fall outside
the scope of the phase down. If that is not possible, there are various new “moderate GWP”
refrigerants that will come on the market over the next few years. These have GWPs in the
200 to 700 range (see Information Sheet 29 for further guidance).

d) For new systems, ensure a low leakage design. Spending a little extra on good quality
components and design strategies that avoid problems like vibration of pipework can keep
leakage to a minimum – this will be a good investment as the prices of HFCs rise in response
to the phase down.

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).