Considerations for Establishing National HFC Quota System

The Parties to the Kigali Amendment need to establish a mechanism to effectively control the production and consumption of hydrofluorocarbons (HFCs), a group of greenhouse gases that are controlled under the Montreal Protocol. Similar to the hydrochlorofluorocarbon (HCFC) phase-out, an effective quota system can play a vital role in assisting Parties to be in compliance with their HFC consumption targets.

However, the management of HFC quotas could be more complicated than HCFC quota since (i) many more HFC substances are currently being used in the market in various sectors compared to HCFCs, and new HFC blends with lower Global Warming Potential (GWP[1]) might be introduced into market from time to time; (ii) The GWP values of the controlled HFCs/HFC blends vary significantly, which might mislead the sectoral needs of HFCs and the compliance target; Such dynamic characteristics coupled with the phasedown instead of phaseout can have an impact on the quota allocation, trading, and monitoring etc. As HFC consumption in most countries is determined by their import, this document aims to highlight guiding principles and key aspects that countries need to consider when developing their import quota system. The underlying principles and approaches are equally applicable for production and export quota allocation.