Industry, EPA debate HCFC allowances

September 12, 2000
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WASHINGTON — On April 5, the federal Environmental Protection Agency (EPA) issued an Advanced Notice of Proposed Rulemaking that proposes future allowance of HCFC consumption.

The proposal would be for an “allowance allocation system” to control future consumption of HCFCs, which are designated Class II refrigerants. The current system defines consumption as production plus imports minus exports.

Since January 1996, the cap on HCFC consumption for the United States has been 15,240 ODP-weighted metric tons, against which future step-wise reductions will be made, with the eventual phaseout in 2030. This phaseout schedule is spelled out in the Montreal Protocol.

For 1995-97, HCFC consumption was well within the cap. However, last year, the strongest year ever for the industry, the U.S. reached 92% of the cap — which helped spur the EPA proposal.

The agency is proposing to leapfrog the usual regulatory process by following its advanced notice with an “Interim Final Rule,” to take effect in less than six months — January 1, 2000. A final rule would follow about nine months later.

This acceleration drew the criticism of the Air-Conditioning and Refrigeration Institute (ARI), which said the plan wouldn’t allow time for interested parties to review and comment on it.

ARI said it would support an allowance system if it mirrored the accounting system already in place for HCFCs, one based on consumption. The ODP-weighted measurement should be retained to allow producers to alter production and imports in response to market demands.

Allowances should be considered as “rights that can either be sold or returned to the EPA for reallocation” if a producer decides to discontinue production of a chemical.

The right baseline

ARI also urged that the baseline use the average of the data from the consecutive years 1996- 98, which would “minimize any inadvertent disparity” in treatment of chemical producers and others.

The Alliance for Responsible Atmospheric Policy, like ARI, generally supported EPA’s proposals, but urged more time for comments to avoid “confusion and hardship” in the regulated community.

The Alliance also said that any revision of the rule should not affect ongoing international negotiations, nor encourage reduction in the cap or the timetable for HCFCs. Recently, European countries have tried to accelerate the phaseout of HCFCs beyond the timetables set in the Protocol.

Another source of concern is that HCFC allowances may “create an artificial and detrimental shortage in the marketplace.

“The Protocol has established a cap on HCFC consumption, and it is unnecessary for EPA to establish a second, lower limit.”

Both ARI and the Alliance said there should be no labeling of HCFCs — an idea floated in the proposed rule. Such labeling “could prematurely discourage the use of HCFCs, a perfectly acceptable and legally produced alternative,” ARI said.

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