EU F-Gas Regulation Guidance Information Sheet 17: F-Gas Producers, Importers and Exporters
This information sheet is aimed at organisations that are producers, importers and exporters of bulk F-Gases.
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.
Contractors play a major role supporting operators of refrigeration, air-conditioning and heat pump (RACHP) equipment. They have to comply with a number of requirements under the F-Gas Regulation. 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.
A wide range of further guidance is available for other aspects of the EU F-Gas Regulation – see Information Sheet 30 for a full list and a glossary of terms.
2. The HFC Phase Down Process
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:
3. The HFC Phase Down Regulations
In the 2014 EU F-Gas Regulation the following Articles are of key importance to F-Gas producers, importers and exporters:
4. The Annual Maximum Allocation
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. The phase down steps are illustrated in Figure 1.
Figure 1: HFC Phase Down Steps
5. 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.
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 1907/2006.
6. Exemptions from the HFC Phase Down
The following exemptions allow some trade in HFCs outside of the quota system:
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.
7. The EU HFC Registry
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:
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.
8. Transferring quotas to another company
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.
9. Annual reporting requirements
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.
Reporting thresholds defined in terms of tonnes CO2e and are summarised in Table 1.
Table 1: HFC Reporting Thresholds
* The reporting requirement is for 1 metric tonne or 100 tonnes CO2 – for all HFCs the 100 tonnes CO2 threshold always applies. For some very low GWP products listed in Annex II of the Regulation the 1 metric tonne threshold may be applicable.
n/a Not applicable: these requirements were not in the 2006 Regulation
Information Sheet 20 gives further details of annual reporting requirements.
Further details of the reporting requirements are specified in Annex VII of the Regulation and in Commission Implementing Regulation 1191/2014.
10. 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:
EU-based manufacturers of pre-charged equipment can only use HFCs from the EU quota to pre- charge their products.
11. 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 (see Information Sheet 20).
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.
This Information Sheet has been prepared by Gluckman Consulting in collaboration with the Defra (UK Department for Environment, Food and Rural Affairs) and Jacobs
This document contains the best information available to date and will be updated as more or different information is made available. It does not seek to provide a definitive view on the legal requirements; only the courts can provide such a view. If there are uncertainties you should always refer to the text of the Regulation and seek qualified legal advice.
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