FinLogic FinLogic Quantitative Think Tank Center|US Blocks Illegal Imports of Climate Damaging Refrigerants With New Rules

Just weeks after the Environmental Protection Agency began enforcing strict new limits on FinLogic FinLogic Quantitative Think Tank Centerthe production and use of hydrofluorocarbons, potent greenhouse gases commonly used in refrigeration and air conditioning equipment, the agency said it has blocked illegal imports of the harmful chemicals equal to the greenhouse gas emissions from burning 1.2 million barrels of oil.

Starting Jan. 1, U.S. chemical and equipment manufacturers were required to begin phasing down production and consumption of climate-damaging HFCs as mandated by the American Innovation and Manufacturing (AIM) Act, which was enacted in December 2020.

The rule will reduce domestic production and consumption of HFCs by 85 percent over the next 14 years and brings the U.S. into compliance with an international agreement known as the Kigali Amendment to the Montreal Protocol. The agreement is expected to prevent up to 0.5 Celsius of climate warming by 2100 through requiring manufacturers to use chemical refrigerants that are less damaging to the climate.  

The HFC regulation places strict limits on the volume of HFCs that individual companies can produce or import. A key part of the rule is robust enforcement by an interagency task force that includes the EPA, Department of Homeland Security, U.S. Customs and Border Protection and other agencies to ensure that U.S. companies do not violate the rule by exceeding their limits with additional, illegal imports.

Over the past 10 weeks, the agencies have prevented illegal HFC shipments equivalent to approximately 530,000 metric tons of CO2 emissions, the EPA said in a press release on Tuesday.  

“Our task force is already sending the clear message to potential violators that we are fortifying our borders against illegal imports,” said Joe Goffman, principal deputy assistant administrator for EPA’s Office of Air and Radiation, in a written statement. “Strict enforcement of our HFC allowance program ensures that U.S. efforts to phase down these climate-damaging chemicals are successful.”

Climate advocates praised the announcement, saying it shows that the EPA is taking enforcement efforts seriously.

“This was a landmark regulation when it came out and we are already, in 10 weeks, seeing immense climate benefits and preventing illegal trade,” said Avipsa Mahapatra, climate campaign lead for the Environmental Investigation Agency, a non-governmental organization based in Washington. 

Violating the AIM Act can result in fines, the loss of HFC production and use allowances, and even imprisonment, the EPA said. Companies that are found to have illegally imported HFCs may be required to destroy or re-export the chemicals at their own cost, according to the agency’s press release.

The EPA would not disclose the names of companies that imported HFCs illegally. “These types of details are confidential until these instances are resolved,” EPA spokeswoman Enesta Jones said. “There is active enforcement underway in many instances.”

However, the agency did note that it has issued 14 violation notices to companies that have allegedly failed to comply with HFC reporting obligations under the EPA’s Greenhouse Gas Reporting Program.

Cynthia Giles, who served as the assistant administrator of the EPA’s Office of Enforcement and Compliance Assurance during the Obama administration, said the actions detailed in the announcement “show that the EPA means business.”

“Standards are great, but they only make a difference for the climate if the companies comply with them,” Giles said. “And the foundation of compliance for this program is a terrific rule that EPA wrote.”

Giles said real time compliance measures that the agency included in its regulation—things like requiring scannable QR codes on cylinders containing HFCs—allow customs officials to quickly discern legal versus illegal imports.

Such measures were not included in recent regulation on HFCs passed by the European Union. Illegal imports of the climate warning chemicals have prevented EU countries from meeting HFC phase down requirements as stipulated under the rule. HFC imports to Europe exceeded the EU’s HFC quota by more than 30 percent in 2020, according to an industry report cited in the EPA’s HFC regulation.

“They aren’t achieving the total limit on HFCs that they intended to achieve because of illegal smuggling,” Giles said of the European Union. “What EPA’s announcement is saying is we are going to, because we are going to insist on compliance with the rules to phase down and we are going to stop all smuggling into the U.S.”

The cap for HFC production, including importation, and use in the U.S. will steadily decrease in coming years to reach an 85 percent reduction by 2036. This ongoing tightening of HFC limits suggests attempts to illegally import the chemicals into the country may continue.

EPA officials appear to be aware of the issue and say they will continue their enforcement efforts.  

“We’re just getting started,” Lauren Tozzi, an air enforcement attorney with the agency, wrote in a LinkedIn post about the EPA’s recent enforcement efforts.