On October 6, 2023, the EPA announced two regulations in the continued crusade to phase down the use of super-polluting hydrofluorocarbons (HFCs).
The first new action is a final rule to accelerate the ongoing transition to more efficient and climate-safe technologies in new refrigeration, heating, and cooling systems and other products by restricting the use of HFCs where alternatives are already available.
The second action is a proposed rule to better manage and reuse existing HFCs, including by reducing wasteful leaks from equipment and supporting a growing American industry for HFC recycling and reclamation.
HFCs are potent greenhouse gases (GHGs) that were developed for use in refrigeration, air conditioning, aerosols, fire suppression, and foam blowing. They were developed to replace ozone-depleting substances (ODSs) such as chlorofluorocarbon (CFC) refrigerants. At the time of their introduction, HFCs were considered an improvement because, although they do contribute to global warming, they don’t affect the ozone layer directly. However, their global warming potential (GWP) is hundreds to thousands of times more harmful than carbon dioxide (CO2).
“Super pollutants, like HFCs and methane, are the low-hanging fruit in the fight to slow climate change,” said Congressman Scott Peters, D-Calif. 52, in an EPA news release.
AIM Act
Congress enacted the American Innovation and Manufacturing (AIM) Act on December 27, 2021, which gave the EPA authority to:
- Phase down production and consumption of HFCs.
- Maximize reclamation and minimize HFC releases from equipment.
- Facilitate the transition to next-generation technologies through sector-based restrictions on HFCs.
“Under the AIM Act, the Biden-Harris Administration is phasing down HFCs to achieve a 40% reduction of HFCs starting in 2024 and an 85% reduction by 2036,” states the Agency news release. “Today’s actions will support the national phasedown, including through an additional $4.5 billion in estimated savings for industry and consumers, while supporting good-paying American manufacturing jobs to produce the next generation of equipment and HFC alternatives.”
“Today’s actions embody President Biden’s leadership on the climate crisis by tackling these planet warming chemicals while investing in American technology and innovation,” said EPA Administrator Michael S. Regan in the October 6, 2023, Agency news release. “This final rule supports our transition away from HFCs and positions our nation to be competitive on the global stage, while the proposed emissions reduction and reclamation program will help ensure we achieve our national HFC phasedown.”
Kigali Amendment
The U.S. Senate ratified the Kigali Amendment to the Montreal Protocol on September 21, 2022. At that time, the United States joined 137 other nations in a global agreement to phase down HFCs. Under the amendment, participating countries committed to cut the production and consumption of HFCs by more than 80% over the next 30 years. This schedule avoids more than 80 billion metric tons of CO2 equivalent (CO2e) emissions by 2050, which prevents up to 0.5° Celsius warming by the end of the century.
Under the amendment, developed countries began reducing HFC consumption in 2019. Most developing countries will freeze consumption in 2024, with a small number of developing countries with unique circumstances freezing consumption in 2028.
Signing the agreement commits participating countries to a legally binding contract that creates rights and obligations under international law.
Technology Transitions Rule
The final Technology Transitions Rule, announced October 6, 2023, will help guide the overall phasedown by accelerating the transition away from HFCs in areas where substitutes are already available or being introduced—a key prong of the bipartisan AIM Act.
This final rule addresses petitions from companies, industry associations, environmental groups, and state governments that were granted in October 2021 and September 2022 and restricts the use of certain HFCs in over 40 types of:
- Foams
- Aerosol products
- Refrigeration, air conditioning, and heat pump equipment
The rule bans HFCs in certain equipment and sets a limit on the GWPs of the HFCs that can be used in each subsector, with compliance dates ranging from 2025 to 2028.
The Technology Transitions Rule applies to both imported and domestically manufactured products, which will help ensure a level playing field for American businesses that are already transitioning to HFC alternatives.
“The Technology Transitions provisions of the AIM Act are critical to ensuring an orderly transition from higher GWP refrigerants to lower GWP refrigerants while creating American jobs and protecting the environment,” said Stephen Yurek, president and CEO of the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), in the Agency news release. “AHRI has appreciated the opportunity to participate in this rulemaking and looks forward to continuing to work constructively with the EPA to assist American manufacturers in developing and deploying economical, efficient and affordable new refrigerant technologies.”
The EPA estimates that the Technology Transitions Rule would provide additional cumulative GHG emissions reductions of at least 83 million metric tons of CO2e (MMTCO2e) from 2025 to 2050—a benefit of at least $3 billion. In addition to climate benefits, this final rule is estimated to provide $4.5 billion in savings for industry and consumers through 2050, largely from improved energy efficiency and lower-cost refrigerants.
Management of certain HFCs and substitutes
The proposed program to manage emissions reduction and reclamation of HFCs and their substitutes would help minimize HFC leaks across the life span of existing equipment, such as air conditioners and refrigeration systems, while also maximizing the reuse of existing HFCs, supporting a growing American industry for recovering HFCs from existing equipment and reclaiming them to be used again, all while reducing lifecycle emissions.
The proposed rule includes requirements for repairing leaky equipment, use of automatic leak detection systems on large refrigeration systems, use of reclaimed HFCs for certain applications, recovery of HFCs from cylinders before their disposal, and a container tracking system.
The proposed rule on an HFC emissions reduction and reclamation program is estimated to prevent at least an additional 142 MMTCO2e of HFC emissions over the same time—an incremental net benefit of at least $6.1 billion.
The Final Technology Transitions Rule and the proposed Management of Certain Hydrofluorocarbons and Substitutes Program are expected tohelp unlock additional climate benefits and savings in addition to the national phasedown program, which is estimated to provide approximately $270 billion in benefits.
“Alliance members commend the timely release of the technology transitions rule to implement the AIM Act, and the proposed rule on HFC Refrigerant Management,” said Kevin Fay, executive director of the Alliance for Responsible Atmospheric Policy, in the Agency news release. “These actions are the two important remaining policy legs of the AIM Act phasedown of HFC compounds. U.S. industry has invested several billion dollars in development and introduction of low-GWP compounds and technologies, and the Biden Administration’s timely action reflects the value attributed to this investment and these important implementing actions.”
“We welcome EPA’s continued action to phase down HFCs, speed the transition to cost-effective alternatives, and ensure these harmful pollutants are reclaimed and recovered,” said Casey Katims, executive director of the U.S. Climate Alliance, in the Agency news release. “These rules build on the strong foundation Alliance states established and we look forward to working with EPA to continue to maximize the benefits for consumers and communities.”
Delivering progress on the national HFC phasedown
The EPA also recently issued 2024 HFC allowances, which allow companies to produce or import bulk HFCs for calendar year 2024.
Defining allowance units
An allowance is the unit of measure the EPA uses to control production and consumption. An HFC allowance is equal to 1 metric ton of exchange value equivalent (i.e., 1 metric ton CO2e). HFCs with higher GWPs require more allowances to produce or import than lower-GWP HFCs. The AIM Act specifies that an allowance allocated by the EPA is a limited authorization for the production or consumption of a regulated substance and doesn’t constitute a property right.
To understand how allowances translate to quantities of various HFCs intended for production or import, see the EPA HFC Allowance Calculator.
The allowance program
Allowances are used to produce or import bulk HFCs. There are three types of HFC allowances:
- Production
- Consumption
- Application-specific allowances
For industry producing HFCs, it’s necessary to use both production and consumption allowances. The importation of HFCs only expends consumption allowances.
2024 HFC allowances
In 2024, the overall number of allowances will be significantly lower than in 2023, as Congress has directed a reduction to 60% of the historic baseline levels of HFCs—down from 90% available this year. “Allowances are issued consistent with the methodology laid out in the final rule,” states the Allowance Allocation Methodology for 2024 and Later Years the EPA published in July.
Illegal HFC trade task force
In August, the Interagency Task Force on Illegal HFC Trade, co-led by the EPA and the Department of Homeland Security and comprising the Departments of Defense, Justice, and State, held its semiannual meeting along with the White House and participants from the Environmental Investigation Agency. The task force reported that because the allowance program went into effect on January 1, 2022, it has prevented over 1.1 MMTCO2e of illegal HFC shipments—equivalent to the GHG emissions from nearly 250,000 gasoline-powered cars in a year.
“The Task Force is working diligently to continue to improve real-time monitoring of our borders to prevent illegal HFC trade, especially leading up to the 2024 reduction in HFC imports,” the EPA news release continues. “EPA also continues to issue administrative consequences, retiring or revoking allowances from companies that misreport or import HFCs without expending the proper number of allowances. Retired allowances are no longer available to be used, providing additional climate benefits.”
Proposed rule
The EPA will accept comments on the proposed rulemaking, “Management of Certain Hydrofluorocarbons and Substitutes under Subsection (h) of the American Innovation and Manufacturing Act of 2020,” for 60 days after publication in the Federal Register and hold a public hearing. The Docket number is EPA-HQ-OAR-2022-0606. See the pre-publication version of the proposed rule.