What’s happening? The European Council approved legislation aimed at curbing the use of fluorinated gases (F-gases) and ozone-depleting substances (ODS) in a move that will remove 500 million tonnes of CO2e emissions by 2050. The new rules mandate a total phase-out of hydrofluorocarbons (HFCs), which account for 90% of F-gas emissions by mid-century, coupled with a 95% reduction by 2035 against 2015. The use of all F-gases will be restricted when climate-friendly alternatives are available, while an export ban on equipment containing such gases will be imposed. The regulations also expand requirements for ODS recycling, reclamation and destruction to cover a range of sectors, such as refrigeration, air conditioning, heat pump equipment, building materials and fire protection systems. (ESG Today)

Why does this matter? F-gases and ODS, which account for around 3% of the EU’s total greenhouse gas (GHG) emissions, are highly potent with global warming potential thousands of times more powerful than CO2. Additionally, ODS damage the ozone layer that absorbs harmful UV radiation from the sun, preventing it from reaching the Earth’s surface. Both categories of these human-made chemicals are already subject to EU legislation through the 2014 F-gas regulation and the 2009 Ozone regulation that were implemented to fulfil obligations set out by the 1987 Montreal Protocol – one of the most successful environmental treaties ever – and the 2019 Kigali Amendment. The new rules will further cut emissions of these substances, forming part of the European Green Deal and will enter into force 20 days after publication in the EU’s Official Journal. 

Phase out timeline – In addition to banning the sale of equipment containing HFCs, such as domestic refrigerators, chillers, aerosols and foams where it is feasible to switch to F-gas alternatives, the new rules also set dates for when F-gases in other equipment need to be totally phased out. For example, medium-voltage switch gears need to phase out F-gases by 2030, high-voltage switchgears and small monoblock heat pumps and air conditioning by 2032 and split air conditioning and heat pumps by 2035. Meanwhile, the rules regarding ODS strictly limit their use to certain conditions, such as for feedstock, process agents, in laboratories and for fire protection in specific applications like aircraft and military equipment. 

Climate friendly alternatives – The European Commission believes the new regulations will inspire manufacturers of products that typically rely on F-gases to pivot towards climate-friendly alternatives, such as hydrocarbons and ammonia. In turn, this will advance the development of innovative clean technologies, presenting a long-term opportunity for companies working in this space. 

US action – Last year, the US Environmental Protection Agency (EPA) took similar steps by issuing a final rule to cut HFCs by 40% below historic levels between 2024 and 2028, having successfully achieved a 10% phase-down step implemented between 2022 and 2023. The legislation aligns with the bipartisan American Innovation and Manufacturing Act (AMI) target to curtail production and use of the chemicals by 85% by 2036 in order to avoid around 0.5C of global warming by the end of the century. The EPA also introduced measures to restrict the use of certain HFCs in more than 40 types of products and equipment starting in 2025 and has proposed regulations to improve the management and reuse of existing HFCs. 

Global efforts – More broadly, over 60 countries committed to the Global Cooling Pledge – unveiled at COP28 in Dubai late last year – recognising that promoting sustainable cooling could save 78 billion tonnes of CO2e by 2050. The signatories agreed to reduce emissions associated with cooling across all sectors by at least 68% by 2050 against 2022 levels, with a specific focus on refrigerants with high global warming potential, including ratifying the Kigali Amendment by 2024 and for early action to reduce the use of HFCs via the Montreal Protocol Multilateral Fund. The nations also committed to a joint effort to boost the global average efficiency of new air conditioning equipment by 2030.