Hydrofluorocarbons (HFCs) were developed and introduced in the late 1980s to serve as replacements for ozone-depleting substances (ODS) primarily used in the air conditioning, refrigeration, aerosols, fire suppression, and foam blowing industries. While HFCs have an ozone depletion potential of zero, they can have a global warming potential (a measure of relative climate impact of a greenhouse gas) that can be hundreds to thousands of times greater than that of CO2 – depending on the HFC substance.
To address HFC usage, the American Innovation & Manufacturing (AIM) Act was enacted by congress on December 27th, 2020 and is applicable to eighteen specific HFC substances. The AIM Act directs the US Environmental Protection Agency (EPA) to address HFCs by phasing down HFCs by limiting production and consumption, maximizing reclamation and minimizing releases from equipment, and facilitating the transition to next-generation technologies through sector-based restrictions.
The Act directs EPA to phasedown production and consumption of HFCs incrementally over the next 15 years. The next phasedown period is set to begin in 2024 and will restrict production and consumption to 60% of baseline levels. Ultimately, final production and consumption will be restricted to 15% of baseline values beginning in 2036.
Production & Consumption Phasedown Schedule
To achieve this, the AIM Act gives EPA authority to establish an allowance allocation and trading program. Every year by October 1st, the EPA will issue entities allowances for production & consumption. Allowances are measured in metric tons of exchange value equivalent (MTEVe). One MTEVe is numerically equivalent to one metric ton of CO2 equivalent (MTCO2e). Each of the 18 regulated substances were assigned a corresponding MTEVe exchange value. The higher the exchange value of a substance, the higher the global warming potential, and the more allowances an entity would have to expend to either produce or import the HFC. Based on the definitions outlined in the Act, producing HFCs will require expending both production allowances and consumption allowances. Importing HFCs will require expending only consumption allowances.
List of the 18 Regulated HFC Substances & their Corresponding Exchange Values – 42 U.S.C. § 7675 subsection (c)(1):
Additionally, there is a third category of allowances referred to as “application-specific allowances” that can be used to either produce or import HFCs for use in six specific applications that are outlined in the act. The six applications include the metered-dose inhaler, defense spray, structural composite foam, semi-conductor, mission-critical military end uses, and onboard aerospace fire suppression industries.
In addition to the phasedown of production and consumption, the second main objective of the Act is to maximize HFC reclamation and minimize releases from equipment. The Act directs EPA to establish a program that maximizes HFC reclamation, minimizes releases from equipment, ensure safety of technicians and consumers, and establish regulations to control activities regarding the servicing, repair, disposal, or installation of equipment. The Act also establishes a grant program intended for small businesses for the purchase of HFC recycling or reclamation equipment, including within the service or repair of motor vehicle air conditioning systems. A $5,000,000 annual allowance for fiscal years 2021-2023 is listed in the Act for small business grants.
The third main objective of the Act is to facilitate the transition to next-generation technologies through sector-based restrictions. If an alternative technology exists, the Act gives EPA permission to restrict the use of an HFC on a full, partial, or graduated schedule. An entity is allowed to petition the restriction and the EPA will have 180 days to either grant or deny. Factors for EPA to either grant or deny the petition will be based on the best available data at the time of the petition as well as the availability of substitutes for uses of the regulated substance that is the subject of the petition. The EPA will have to consider technological achievability, affordability for residential and small business consumers, consumer costs, contractor training costs, efficiency standards of the equipment/appliance, overall economic and environmental impacts, as well as the remaining phase-down period for the HFC being petitioned.
How does the AIM Act affect your company?
Under the EPA-issued final rule promulgated in response to the AIM Act, there are recordkeeping and reporting requirements for entities that produce, import, export, destroy, use as feedstock, reclaim, package, or otherwise distribute HFCs. These entities are required to submit Microsoft Excel-based reporting forms through EPA’s electronic greenhouse gas reporting tool. Quarterly reports are due 45 days after the end of a reporting period, however there are also semi-annual, annual, one-time, and as-needed reporting frequencies depending on the report type and the nature of the HFC transaction.
More information on the AIM Act and HFC reporting and recordkeeping requirements can be found on EPA’s website through the links below:
How can Capaccio help your company?
EHS professionals from many different industries have historically relied on many disparate systems for data collection and tracking of information related to regulatory requirements. But now, the EHS-DashboardTM, developed by Capaccio. provides a “single source, scalable solution to the overarching challenges that organizations and their EHS teams and programs of all sizes face in 2023 and beyond.” As covered in our white paper “How Capaccio’s Targeted Software & Strategic Support Fosters Real World Growth Across EHS Teams and Systems” Capaccio Whitepaper not all data management systems are created equally, and that is why it is critical for a company to use software such as EHS-DashboardTM, that has the flexibility to track and respond to shifting compliance goals and benchmarks in real time while also allowing for the ability to develop, track, and complete succinct objectives and key results (OKRs) that are directly tied to not only the AIM Act goals, but their overall business goals as well.