EU F-gas Regulation 3.0 – Because We Can

AMBITION IS THE PATH TO SUCCESS

The year 2023 was the hottest year on record. This summer many have experienced unpleasant heatwaves and some had to cope with floods, hailstorms or fires with devastating consequences. Weather and climate-related extreme events have risen between 1980 and 2022, causing 220 000 deaths and € 650 billion in economic losses over the period in the EU, of which about € 170 billion over the past 5 years alone¹. This reminds us that taking ambitious action to prevent climate change to the extent we can is not a choice – it is a MUST.

This is also why the EU has committed itself to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 and to become net climate neutral by 2050. It implies that our society will have to undergo a major and complex transformation. To this end the EU recently reviewed all climate and energy legislation to make them fit for purpose, in the sense that they reduce emissions effectively in line with our climate objectives while also fostering innovation and competitiveness.

One of the many pieces in this puzzle of policy measures is the new EU F-gas Regulation² that entered into force in March this year. These rules build on the successful EU F-gas Regulation³ from 2014 that already reduced the use of highly warming F-gases very significantly. As a result, F-gas emissions in the EU are today 33% lower than they were at their peak in 2014⁴. Furthermore, it has stimulated innovation in F-gas alternatives or F-gases with a much lower climate impact. The technological advancement achieved means that we can now reduce the use of F-gases even further and hence our future emissions. The impact assessment⁵ made by the European Commission in 2022 showed that its proposed F-gas measures could reduce emissions by ca 310 million tonnes CO2 equivalents, which is more than the annual overall greenhouse gas emissions of a larger EU country such as Spain⁶. The emission reductions related to the adopted F-gas Regulation are likely to be of a similar order.

The new Regulation will also ensure that the EU will be overachieving its international obligations to phase down consumption of hydrofluorocarbons (HFCs) under the Montreal Protocol on substances that deplete the ozone layer⁷.

STRICTER QUOTA SYSTEM, HFC PHASE-OUT AND NEW PROHIBITIONS

Having the know-how available, does not automatically translate into large-scale investment in climate-friendly solutions. There must be an incentive to make the effort, including a conducive regulatory environment, which is where the new F-gas Regulation comes in. By making an even stricter quota system for HFCs and by including additional prohibitions e.g. for the placing on the market of F-gas equipment and products, the gradual shift to a predominance of climate-friendly solutions will continue, allowing companies sufficient time to adapt while discouraging complacency.

With the stricter quota system, the total HFC amounts that quota holders can place on the market in 2030 will be just 5% of the amounts placed on the EU market in 2015 (measured in CO2 equivalent) and in 2050 HFCs will not be allowed to be placed on the EU market anymore at all (“phase-out”)⁸. The use of F-gases with a global warming potential (GWP) above 150 will be prohibited in all new refrigeration equipment⁹ and in smaller air-conditioning equipment, heat pumps and chillers different dates and by 2030 at the latest. For several types of equipment the rules also require that F-gases are avoided altogether. Notably, this includes air-conditioning equipment and heat pumps, both monoblocks and splits, as well as chillers, by 2032 or 2035 at the latest¹⁰. Undertakings should not wait for these prohibition dates. The earlier they shift, the less impacted they will be by the quota system, and the more likely they are to benefit from early mover advantages. By way of example, the monoblock heat pump market is already shifting clearly towards the use of propane in new models.

The new Regulation was adopted by the European Parliament and the Council of the EU (ministers from each EU country) – after intense negotiations on how to strike the right balance, i.e. how to reach the full potential without asking too much, too quickly. The vast technical input from stakeholders throughout the process was very valuable to reach a good outcome. Considering that there will always be special cases and niche products, where replacement of F-gases is particularly difficult, and that the amount of quota available each year is based on expert predictions of future market developments, it was essential to also include some escape clauses allowing to make some adjustments in a timely manner, if needed, for instance:

• The Commission is monitoring the impacts of the quota system closely and may, in case a shortage of HFCs that would impact negatively on the deployment of heat pumps in the EU, exceptionally allocate additional quota in each year from 2025 to 2029.
• Most new prohibitions entail a general exemption for cases where safety requirements at the site of installation do not allow the use of alternatives that would comply with the prohibition. Special labelling rules apply to such equipment.
• The Commission may also adopt time-limited Derogation Decisions for equipment or products from a prohibition or from being subject to quota. Only authorities in EU countries may request an exemption and they will have to justify to the Commission and the Implementing Committee (i.e. competent authorities in the other EU countries) why they consider that the conditions for granting an exemption are fulfilled.

Moreover, the Commission will make several reports, including a review of alternatives in the mobile refrigeration and air conditioning sector (by 2027) as well as an analysis of the impacts of the Regulation on the health sector (by 2028), followed by a general review of the F-gas policy by 2030 that will show if it is appropriate to adjust the rules.

Another novelty is a prohibition to export equipment and products that are prohibited in the EU, even though F-gas equipment with a GWP up to 1000 may always be exported. This means that if a GWP limit of 150 applies to equipment placed on the EU market, the GWP limit for exporting that type of equipment would be 1000, mirroring the fact that equipment with medium GWP is currently state-of-the-art in the markets of the EU’s trading partners. On the other hand, the export rules should prevent dumping of older or technically obsolete equipment from the EU in foreign countries, to support them in meeting their obligations to reduce consumption of HFCs, in line with their obligations under the Montreal Protocol on substances that deplete the ozone layer. However, in case there is an exemption in the relevant prohibition for the EU market, e.g. related to safety requirements, it is considered that a similar exemption would apply to export if the same conditions would occur in the importing country. 

EMISSIONS PREVENTION AND NEW TYPES OF CERTIFICATES FOR TECHNICIANS

The new rules expand the existing measures that aim to prevent emissions from processes, equipment, and products where F-gases are used.

For instance, now these types of measures also cover the unsaturated HFCs or HFOs, mainly to prevent emissions that break down into chemicals that remain for a very long time in the atmosphere.

Furthermore, the existing prohibition to service refrigeration equipment with virgin F-gases with a GWP above 2500 is extended to all (rather than larger) equipment from 2025 and the GWP value will go down to 750 for stationary refrigeration from 2032¹¹.  A similar ban is now also introduced for air conditioning equipment and heat pumps from 2026. These service bans are not only reducing the use of new F-gases, but they are also incentivising leakage prevention and thus better energy efficiency, as well as more efficient recycling and reclamation of refrigerants.

In addition, obligatory certification and training attestations for technicians working on different types of equipment with F-gases have been in place for a decade and a half in the EU and have shown their benefits in terms of better know-how, less leakage and a level playing field. Therefore, such obligations are now extended to more categories of equipment, in particular in the mobile sector.

Moreover, certification and training has also been made mandatory for technicians working on equipment with F-gas alternatives, where relevant. This was decided because the new rules (in particular the HFC phase-out and the placing on the market prohibitions) imply that F-gas alternatives will have to become the mainstream technology quickly. It is therefore essential that technicians are able to deal with the different properties of these alternatives to be able to install and service such equipment properly and safely.

In September, the Commission adopted implementing rules¹² spelling out the knowledge and skills required when certification agencies in the EU countries issue certificates to cooling technicians that are working on stationary heat pumps, stationary refrigeration and air-conditioning equipment, and stationary organic Rankine cycles as well as in refrigeration units of refrigerated trucks, trailers, light-duty vehicles, intermodal containers, and train wagons. The minimum requirements are depending on the type of refrigerant being used, the charge size of the equipment or the activity performed. There are six types of certificates, including specific certificates covering F-gases (including HFOs) and hydrocarbons; one certificate covering CO2; and one certificate covering ammonia. Similar implementing rules for other types of equipment will be adopted in the near future.

REACHING THE FULL POTENTIAL

A key to success is that the new rules are followed and strictly enforced. Consequently, there are many new provisions in the F-gas Regulation intended to facilitate better enforcement and make illegal activities more difficult. Some of the most important changes are:

• the introduction of a quota price of €3 per ton of CO2 allocated;
• additional requirements for registration in the F-gas Portal¹³, that is used to manage the quota system, licencing and reporting;
• additional requirements for being eligible for obtaining a reference value and quota;
• a requirement for importers and producers to have sufficient quota left at the time of placing on the market (e.g. imports released for free circulation) and not only at the end of the year. All quantities placed on the market require quota, unless they are explicitly exempted from the quota system and are labelled as such;
• a link between the F-gas Portal and the Single Window Environment for Customs that e.g. will enable automated messages to customs about whether F-gases may be released for free circulation;
• More detailed customs, market surveillance and penalty provisions, giving authorities the means to intervene and prosecute effectively;
• An electronic verification of company reports.

Reporting and labelling requirements were also adapted to improve monitoring and to reflect other changes in the rules (e.g. exemptions) so that they can be properly enforced. In September the Commission updated the implementing rules setting out a detailed format for the reports¹⁴ to be submitted by undertakings by 31 March each year as well as a new format for labelling of F-gases and certain equipment and products with F-gases¹⁵. Both formats will apply from 1 January 2025.

The success of the EU F-gas policy depends on all stakeholders in the F-gas business being involved. Legislation can only set the frame, but to reach the full potential a real team effort will be needed. Consequently, all actors are encouraged to adapt to the new F-gas Regulation as quickly as they possiblycan and to continue innovating to find new and better solutions, thus creating future business opportunities. Some manufacturers will need to redesign equipment and installers of equipment also have a major role to play. They need to accelerate the uptake of skills to work on F-gas alternatives and provide the best advice to end-users about the most optimal solution at the site of installation and make sure that during installation energy efficiency is always optimised. Moreover, since illegal activities result in unfair competition, harming all those companies that are respecting the rules, as well as having consequences in terms of unnecessary climate warming emissions, anybody suspecting illegal activities in breach of the F-gas rules should not hesitate to inform the authorities in their country, so that these cases can be investigated.  

It is a complex transformation, but one thing is simple: We must do it, Because We Can.

References

1. European Environment Agency (2023). Economic losses from weather- and climate-related extremes in Europe. ↩︎
2. Regulation (EU) 573/2024, https://eur-lex.europa.eu/eli/reg/2024/573/oj ↩︎
3. Regulation (EU) No 517/2014, https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX%3A32014R0517 ↩︎
4. I.e. 2022 (latest data available). European Environment Agency greenhouse gas viewer. ↩︎
5. SWD(2022) 96 final. ↩︎
6. i.e. 294 MtCO2e (2022). ↩︎
7. The Kigali Amendment to the Montreal protocol implies that countries must gradually reduce their consumption and production of HFCs. Overall, the production and consumption of HFCs is projected to be reduced globally by more than 80% over the next 30 years. ↩︎
8. Except for small amounts for exempted uses which currently include feedstock, semiconductor and military uses, besides destruction and direct export. Such exemptions are subject to special labelling obligations. ↩︎
9. Unless if required for safety reasons at the site of operation. ↩︎
10. With a rated capacity of up to and including 12kW. ↩︎
11. Exempting very low temperature applications and military equipment. ↩︎
12. Commission Implementing Regulation (EU) 2024/2215 – https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202402215. ↩︎
13. These changes are also being reflected in detailed implementing rules. ↩︎
14. Implementing Regulation (EU) 2024/2195, – https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32024R2195. ↩︎
15. Commission Implementing Regulation (EU) 2024/2174, – https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AL_202402174. ↩︎