The U.S. Environmental Protection Agency (EPA) on May 3 issued its first proposed rule under the American Innovation and Manufacturing (AIM) Act of 2020 to phase down the production and consumption of HFCs.

The EPA will accept comments on this proposal for 45 days after publication in the Federal Register and hold a public hearing. Stakeholders may send comments, identified by Docket ID No. EPA-HQ-OAR-2021- 0044, via the Federal eRulemaking Portal.

“With this proposal, EPA is taking another significant step under President Biden’s ambitious agenda to address the climate crisis,” said EPA Administrator Michael S. Regan, in a statement. “The phase down of HFCs is also widely supported by the business community, as it will help promote American leadership in innovation and manufacturing of new climate-safe products.”

The AIM Act, enacted last December, directs EPA to sharply reduce production and consumption of HFC pollutants by using an allowance allocation and trading program. This phase down will decrease the production and import of HFCs in the United States by 85% over the next 15 years.

The EPA’s proposal would set the HFC production and consumption baseline levels from which reductions will be made, establish an initial methodology for allocating HFC allowances for 2022 and 2023, and create “a robust, agile, and innovative compliance and enforcement system,” said the EPA.

The agency intends to use the approach established through this rulemaking to issue allowances for 2022 by October 1, 2021, and plans to revisit the approach for subsequent years in a later rulemaking.

According to an EPA fact sheet on the proposed rule, the proposed baseline for HFC consumption is 229 million metric tons of CO2e while the proposed baseline for production is 375 million metric tons of CO2e. The proposed baselines are based on currently available data, and the final figures may change based on an evaluation of all available data and information received prior to the final rulemaking.

Under the proposal, there would be a 10% reduction in production and consumption of HFCs compared to the baseline from 2022-2023, a 40% reduction from 2024-2028, a 70% reduction from 2029-2033, an 80% reduction from 2034-2035lm and an 85% reduction from 2036 and thereafter.

Also under the proposed rule, the EPA would seek input on methods to implement the program over the longer term by proposing to Issue allowances to companies that produced and/or imported HFCs in 2020, based on past production and/or consumption values. The Agency is seeking comment on which years to use between 2011-2019. 

The agency is also proposing to establish a methodology for trading allowances between companies, while requiring an offset of allowances to further benefit the environment. The EPA is not listing the projected number of allowances that each company would receive in the proposed rule.

To ensure compliance with the phasedown limits, EPA is proposing to:

  • Establish an electronic tracking system for the movement of HFCs through commerce;
  • Require the use of refillable cylinders;
  • Establish administrative consequences (e.g., revocation or retirement of allowances) for noncompliance that would be in addition to any civil and criminal enforcement action; and
  • Establish recordkeeping and reporting, third party auditing, and data transparency requirements.

Regulatory certainty

Prior to passage of the AIM Act, the EPA had stopped regulating HFCs, leaving it to individual states, led by California, which approved sweeping new refrigerant rules last December. Fifteen other states, part of the U.S. Climate Alliance, have passed, or are committed to passing HFC rules. The AIM Act provides “regulatory certainty” across the United States for phasing down HFCs and “ushers in the use of more climate friendly and efficient alternatives,” said the EPA.

“The U.S. Climate Alliance welcomes this next step from EPA to phase down highly potent HFCs across the country,said U.S. Climate Alliance Executive Director Julie Cerqueira.  “Alliance states have been leading the charge in reducing HFC emissions in recent years and now have a strong federal partner in this push.”

The total emission reductions of the proposal from 2022 to 2050 are projected to amount to the equivalent of 4.7 billion metric tons of CO2 – nearly equal to three years of U.S. power sector emissions at 2019 levels. A global HFC phase down is expected to avoid up to 0.5 °C (0.9°F) of global warming by 2100, according to the EPA. (The United Nations puts the reduction at up to 0.4°C/0.7°F).

“We are incredibly excited by the swiftness with which EPA is setting up a framework to implement landmark climate regulation to eliminate HFCs that will achieve emission reductions of 4.7 billion metric tons of CO2e by 2050,” said Avipsa Mahapatra, EIA Climate Campaign Lead.

Other anticipated regulations under the AIM Act will focus on limiting which HFCs can be used in specific sectors, and refrigerant management requirements to control leaks and emissions from equipment. EIA petitioned the EPA to ensure that key sectors like supermarkets and air conditioners transition to the most climate-friendly substitutes available, and the NGO continues to advocate for proactive leak management.