COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY of the IMPACT ASSESSMENT Review of Regulation (EC) No 842/2006 on certain fluorinated greenhouse gases Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on fluorinated greenhouse gases /* SWD/2012/0363 final */
1. Introduction F-gases[1]
are increasingly used in a number of different application fields, such as refrigeration
& air conditioning, foams, aerosols, fire protection and electrical
equipment. F-gases are, however, very potent climate gases.[2] The current F-gas Regulation
focuses mainly on reducing emissions of these greenhouse gases during the
lifetime of equipment and its end-of-life treatment, while it hardly restricts
the use of F-gases in new equipment. At the same time, alternatives to F-gases
that are safe and energy-efficient are already available today in nearly all
fields of application. The Commission published a report on the application,
effects and adequacy of the F-gas Regulation.[3]
Certain implementation shortcomings were identified which need to be addressed.
If fully applied, the F-gas Regulation in combination with the Directive
on mobile air-conditioning (Directive 2006/40/EC) could freeze F-gas emissions
at today's levels. However, the report also concluded that the EU should take
additional action on F-gases, given the potential to further reduce emissions
at relatively low costs. Similarly, the European Parliament has
repeatedly called for ambitious action in this field.[4],[5] At the international level, more than 100
countries are calling for action on F-gases under the Montreal Protocol on
Substances that Deplete the Ozone Layer.[6]
The EU has, since 2009, supported in principle the proposals made for a global phase-down
under the Montreal Protocol. In addition the initiative "Climate and Clean
Air Coalition on Short-Lived Climate Pollutants", which includes the US, G8
countries, the European Commission (EC), World Bank and UNEP, promotes various actions
on F-gases.[7] 2. Problem
definition Climate change affects everybody in terms
of extreme weather conditions and adaptation costs. The international
scientific consensus calls for limiting the global temperature increase to 2˚C to
avoid undesirable climate effects.[8]
In total, F-gases account for 2% of all greenhouse gases in the EU today but
have a much more potent atmospheric warming potential than CO2.
According to the cost-effective pathway to decarbonise the EU economy, emissions
of F-gases should be reduced in the order of 70-78% by 2050 and by 72-73% by
2030 at a marginal abatement cost of approximately €50 per tonne CO2
equivalent.[9]
This translates for the F-gas sector to a decrease of ca. 70 million tonnes CO2
equivalents (Mt CO2eq) as compared to emissions expected in 2030
under a full application of current legislation. Global F-gas use has been growing rapidly
since 1990 and will, if unaddressed, lead to a considerable increase in
emissions. Since equipment and products containing F-gases have a long lifetime
of up to 50 years (e.g. building insulation foams), a lack of public
intervention today would result in unnecessary, high emissions for many decades.
Therefore, apart from addressing existing
shortcomings in the application of the current F-gas Regulation there is a
strong need to further reduce future emissions. Analysis[10] shows that two-thirds of the
expected emissions[11]
in the EU could be avoided cost-efficiently[12]
by 2030, if action is taken to avoid the use of F-gases where suitable
alternatives exist. Cumulatively, emission savings of ca. 625 Mt CO2eq
can be achieved cost-efficiently over the period from 2015 until 2030. Lack of action in this area would result
either in the EU missing its greenhouse gas emission objectives or require
other industrial sectors to take more expensive action, thus causing a loss of
cost competitiveness for industry as a whole. In addition, there is an unexploited
potential to encourage the market penetration of green, alternative technologies,
thus stimulating innovation, green jobs and growth.[13] 3. Policy
Objectives The general objective of the review of the F-gas
Regulation is to ensure a cost-efficient[14]
contribution to reducing greenhouse gas emissions in the EU by 80 to 95% in 2050
within the global challenge of keeping climate change below 2ºC of pre-industrial
levels. This should be achieved in particular by –
discouraging the use of F-gases with high GWP where
suitable alternatives exist; –
encouraging the use of alternative substances or
technologies without compromising safety, functionality and energy efficiency; –
preventing leakage from equipment and proper end
of life-treatment of F-gas applications; –
facilitating convergence towards a potential
future agreement to phase down HFCs under the Montreal Protocol; –
enhancing sustainable growth, stimulate
innovation and develop green technologies; –
limiting any undesirable effects on SMEs,
competitiveness and employment, the administrative burden for companies and
authorities and preserving the competition in the Internal Market, to the
extent possible. 4. Policy
Options The impact assessment considers five policy
options. The first option analysed is "no
policy change" (Option A) which introduces no new legislative
requirements but does include clarifications on definitions and non-legislative
action at EU level to support a better application of the existing requirements.
Current legislation is considered
essential but insufficient to reach the objectives and hence it is used as the baseline
against which four supplementary policy options are assessed: –
Option B: The use of "voluntary
agreements" among industry players in sectors where such agreements
were considered realistic due to low abatement costs; –
Option C: The option "extending scope of
containment and recovery" requires containment in sectors currently
not covered by the F-gas Regulation; –
Option D: The "phase-down"
option introduces step-wise declining limits until 2030 for the amounts of HFCs
that can be put on the EU market. This option also includes measures targeting HFCs in pre-charged equipment, to avoid
that only EU-produced products would be affected by the cap; –
Option E: "Bans" on the use of F-gases
in sectors where replacement technologies are already available today for 100%
of the applications. Some of these policy options and the
measures included thereunder are not mutually exclusive and may be combined
with other policy options considered. Further options and sub-options have been
screened and discarded on the basis of four criteria: –
Effectiveness (less than 1 Mt CO2eq); –
Efficiency (more than 50 € per t CO2eq
abated); –
Technical constraints like safety or energy
efficiency; –
Other constraints such as consistency with other
EU policies. Hence, all the chosen options and their
sub-options are from the onset effective, cost-efficient, energy-efficient and safe,
as health and greenhouse gas lifecycle concerns are inherently addressed in the screening analysis. 5. Impacts 5.1. Environmental The most effective option to reduce
greenhouse gas emissions is the phase-down approach (D), saving 71 Mt CO2eq
by 2030 or two-thirds of today's emissions. Bans in certain feasible sectors (E)
would deliver emission reductions of 53 Mt CO2eq, i.e. about half of
today's emissions, while introducing voluntary agreements (B) could achieve 22
Mt CO2eq by 2030 (Table 1). The emission reduction of extending
scope of containment (C) would be very small as limited to some transport modes
only. These emission savings include energy efficiency impacts (i.e. overall
savings from alternatives). The methodological basis for these findings is a
detailed and comprehensive analysis of the feasibility of introducing safe and
energy–efficient alternatives at costs lower than 50 € per ton of CO2eq
abated in each of the 28 main different sub-sectors that use F-gases[15]. Ecotoxicological risks due to
release of substances to the environment are considered to be low or negligible
for all options. 5.2. Economic The F-gas sector comprises a number of
different market players who may be affected in different ways by policy
changes: Producers of F-gases, manufacturers of equipment, electricity
companies, equipment service companies, importers and exporters, users of equipment,
the retail and raw material sectors (e.g. metals and products). A number of different
economic impacts were analysed (Table 1), using an input/output model (EmIO-F)
and a general equilibrium model (GEM-E3). Overall effects are small, with the
input/output model suggesting a small, positive impact on overall output (up to
0.009%) and GEM-E3 predicting a small decline (up to -0.006%). These effects
are strongest in case of a phasedown (D), followed by bans (E). For the
directly impacted sectors, equipment manufacturing may experience small gains,
while the energy supply sector could encounter losses due to higher energy
efficiency of alternative equipment. Effects on the chemical sector are low.
The models predict small losses for the service sector due to the smaller
number of F-gas equipment requiring leakage checks. These potential losses
should however be fully compensated by new servicing needs for alternative
equipment as well as to date unexploited opportunities in the application of
the existing containment provisions. The phase-down (D) touches the highest
number of application sectors and hence stimulates novel (green) technologies
to the highest degree and leads to the highest use of alternatives. For the
same reason total direct costs (investments and operations) to users of
equipment will also be somewhat higher (followed by bans (E) and voluntary
agreements (B)). The underlying assessment is based on
a conservative approach by only considering replacement options which are
currently available and calculations were performed on the basis of today's
costs. The likely decline of costs involved due to future technological
development and economies of scale was thus not taken into account. Indirect effects are considered to be
marginal. Due to the low costs, competitiveness is generally not adversely
affected, in particular since none of the policy
options requires the replacement of existing equipment, so that direct investment costs would only occur after the
end-of-life. The impacts on consumer prices will be
small for all options and negligible in macroeconomic terms (-0.01 to 0.00% for
Options D and E, based on GEM-E3). As for regional impacts, the direct impact
could be €1 higher per inhabitant in Southern European countries due to the
more common use of air conditioning equipment. SMEs form a large part of the overall
companies active in sectors using F-gases. In line with the small economic
effects observed in the analysis, no excessive burdens for these companies are
expected. A phase-down (D) provides more flexibility to industry players than
introducing bans (E), which was frequently highlighted by stakeholders. Safeguards,
such as de minimis clauses, can be introduced to exempt very small F-gas
market players from reporting and certain obligations. All options are designed in a way that domestic producers and
importers of appliances will face the same conditions for placing products on
the EU market. Therefore international competitiveness will not be affected. First
mover-advantages for European companies at the international level are likely,
in particular if a global agreement to phase-out F-gases is reached. A phase-down
(D) and bans (E) would create a substantial market for low-GWP technologies and
thus incentivise the development of such technologies also in exporting third
countries. Administrative costs can be kept relatively low as the existing
reporting scheme under the F-gas Regulation will form the backbone of data
needs for implementing future policy options. Only independent verification
would add to the costs, which is the case in particular for a properly executed
voluntary agreement (B) approach. Table 1: Summary table of
environmental, economic and social impacts of the policy options by 2030[16] IMPACTS || Option B || Option C || Option D || Option E || || Voluntary agreements || Enlarged Scope || Phase-down || Bans || ENVIRONMENTAL || || || || || Emission Reductions SUM [Mt CO2eq] || 22.2 || 1.4 || 70.7 || 53.3 || Total direct costs [(M€/year] || 530 || 66 || 1500 || 1330 || Administrative costs [M€/year] || 10.7 || 0 || 0.2 (+ 1.9 one-off) || 1.2 || Direct effects on sector output (% change) [ % of 2007, I/O model] || 0.006 || Negl. || 0.009 || 0.003 || - machinery/ equipment || 0.38 || Negl. || 0.52 || 0.23 || - services/ maintenance || -0.09 || Negl. || -0.38 || -0.37 || - chemicals || -0.19 || Negl. || 0.17 || 0.03 || - electricity || -0.19 || Negl. || -0.59 || -0.26 || GDP impacts (% change, GEM-E3 model) || smaller than D || Negl. || -0.006 || -0.003 || Impacts Regions || Negl. || Negl. || small effects on EU South || smaller than D || Impacts SMEs || no significant effects || Negl. || no significant effects || no significant effects || Internal market || none || none || none || None || Competiveness, trade& investment || small || Negl. || small positive for alternatives || small positive for alternatives || Third countries || Negl. || Negl. || incentivises alternatives globally || incentivises alternatives globally || Consumer price || Negl. || Negl. || Negl. || Negl. || Innovation & research || facilitates new technologies to low degree || Negl. || facilitates new technologies and products || facilitates new technologies and products || SOCIAL || || || || || Employment: impact in 2030 [No. of jobs] || +600 || Negl. || -16000 to +7000 || -12,000 to +4000 || Safety & health risks || Negl. || Negl. || Negl. || Negl. || 5.3. Social Effects on employment are small. For a phase-down
(D) modelled effects range between an increase of around 7000 to a decrease of
1600 to 16000 jobs. As the effects of the other options are lower the maximum expected
effect on employment is in the order of +0.003% to -0.007% (Option D). Job
creation effects would occur in the machinery and equipment sector as well as
sectors providing input materials (e.g. basic metals, metal products). Job
losses are predicted in the energy supply-sector and the service sector, but
the latter effects are likely balanced out by other effects. Health and occupational risks for alternatives are not expected to increase as long as safety
standards and procedures are followed. The feasibility analysis of alternatives
was based on the precondition that only proven, safe and energy-efficient
technologies should be deployed. Proposed minimum training requirements for certified
personnel covering also alternative substances further minimise safety risks. 6. Comparison of options The Impact Assessment concludes that a phase-down
(D) would give the highest additional environmental
benefit, stimulate innovation to the highest degree and would come at a low
cost to the economy and society as a whole. It results in a reduction of around
60% in 2030 compared to 2005 in line with the EU Low Carbon Economy Roadmap and
is thus the only option sufficiently effective. This option is also seen as more
flexible by many stakeholders, in contrast to bans (E). Voluntary agreements (B)
and even more extending scope of containment and recovery (C) are far from yielding
sufficient emission savings in view of the overall objective. Social and
economic impacts are considered marginal for all options. Overall, the highest effectiveness can be
obtained by complementing the phase-down (option D) with the extension of containment
provisions to some transport modes (Option C), as well as placing on the market
bans in a few limited areas (gases not targeted by the phase-down and destruction
of by-products, which are sub-options included under Option E). Measures to ensure
that quantities imported in pre-charged equipment are counted under the cap are
indispensable for the environmental integrity of the phase-down mechanism and a
level playing field in the market. Some stakeholders[17] also recommend combining a phase-down
with certain "supportive" bans e.g. in the field of refrigeration, to
give more certainty of F-gas availability to those sectors where a replacement
is more difficult. Such bans would, in principle, not affect the environmental,
economic or social impacts, as the "phasedown" would cover these
sectors in any case. Consequently, Option D together with Option C, as well as
complementary and supportive bans, would achieve an emission reduction of ca.
72 Mt CO2eq (adding ca. 1 Mt CO2eq emission reductions to
option D). [1] F-gases include hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs) and sulphur hexafluoride (SF6). By weight, 98% of
F-gases placed on the market in the EU were HFCs (2010 data). [2] F-gases have global warming potentials that is up to
23,000 times stronger than that of CO2. [3] COM(2011) 581. "On the application, effects
and adequacy of the Regulation on certain fluorinated greenhouse gases
(Regulation (EC) No 842/2006)". 26 September 2011. ec.europa.eu/clima/policies/F-gas/docs/report_en.pdf
[4] European Parliament Resolution of 14 September 2011. "A
comprehensive approach to non-CO2 climate relevant anthropogenic emissions."
P7_TA-PROV(2011)0384. [5] European Parliament Resolution of 15 March 2012. "Competitive
low carbon economy in 2050 – EP resolution on a Roadmap for moving to a
competitive low carbon economy in 2050" (2011/2095(INI)), P7_TA-PROV(2012)0086. [6] ozone.unep.org/Meeting_Documents/mop/22mop/MOP-22-9E.pdf
[7] www.unep.org/ccac/ [8] IPCC, 4th Assessment Report, Climate Change 2007:
Working Group III: Mitigation of Climate Change. www.ipcc.ch/publications_and_data/ar4/wg3/en/contents.html
[9] COM (2011) 112. "A roadmap for moving to a
competitive low carbon economy in 2050."eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52011DC0112:EN:NOT
[10] Schwarz et al. (2011) "Preparatory study for a
review of Regulation (EC) No 842/2006 on certain fluorinated greenhouse gases."
Öko-Recherche et al. ec.europa.eu/clima/policies/F-gas/docs/2011_study_en.pdf
[11] Projected under the assumption that the F-gas
Regulation is fully implemented. [12] Often far below €50 / tonne CO2eq [13] Many of these "green growth" companies, often
SMEs, have stated that they find it hard to market their products under current
market conditions. [14] Abatement costs below €50 per tonne of CO2
abated are considered cost-efficient. [15] Schwarz et al. (2011) "Preparatory study for a
review of Regulation (EC) No 842/2006 on certain fluorinated greenhouse gases."
Öko-Recherche et al. [16] Negl. = negligible [17] E.g the Network of Environmental Protection Agencies