New data released last month shows that an illegal market continues to bypass the European Union (EU) quota system which has been in place since 2015.
This system was introduced to phase down hydrofluorocarbons (HFCs) with a high global warming potential (GWP), commonly used in cooling systems from commercial chillers through to car air conditioning systems.
However, uneven enforcement by member states has created an opportunity for criminals to bypass the quota system and import HFCs into the EU illegally.
New data on this issue has been collected by Oxera Consulting LLP and analysed by EFCTC (European Fluorocarbons Technical Committee), a sector group of the European Chemical Industry Council.
Up to a maximum of 31 million tonnes CO2 equivalent (MtCO2e) could have entered through EU borders illegally in 2019. That means in 2018 and 2019, a total of a maximum of up to 73 MtCO2e could have been smuggled into the EU.
This is equivalent to the yearly emissions of more than 55 million cars – one fifth of all the cars on EU roads. This black market undermines the EU’s climate goals, funds organised crime and threatens small and medium-sized businesses across the EU which have invested to comply with the law and supply legitimate refrigerants.
The latest step in the HFC phase down was in January 2021 with a reduction of the quota from 63 per cent to 45 per cent compared to the level in 2015. A large amount of HFCs will be taken off the legitimate market in 2021, creating new opportunities for smugglers to fill the gap.
In a worst-case scenario where demand for HFCs were to stay around the same level after the 2021 phase down and enforcement did not to improve, this black market could double in size.
Murli Sukhwani, general manager of fluorochemicals EMEA at the Chemours Company and Chair of EFCTC Data and Investigations, said there is a major discrepancy between the export volumes reported by China and the import volumes reported by the EU.
“This could indicate that improved controls at European ports are having some effect, but that they could be driving smugglers to find new import routes via neighbouring countries. For example, the biggest seizure of illegally traded HFCs to date was stopped in August 2020 in Romania, coming from Turkey,” he said.