Taking AIM at HFCs: What the New EPA Ruling on Hydrofluorocarbons Means for Your Company

The US Environmental Protection Agency (EPA) has recently issued a final ruling on a landmark program to phasedown the production and consumption of potent climate change contributing hydrofluorocarbons (HFCs). HFCs are used primarily in air conditioning equipment but can also be found in foams and many other functions. Part of the American Innovation and Manufacturing (AIM) Act, the new EPA rule will phasedown HFCs by eighty five percent over the next fifteen years. EPA estimates that “this rulemaking will avoid cumulative emissions of 4,560 million metric tons of exchange value equivalent of HFCs,” and that it will have “a present value of cumulative net benefits of $272.7 billion” from 2022 through 2050.

The AIM Act will provide guidelines and enforcement measures to target eighteen specific HFCs. The Act will also create an allowance allocation and trading program relative to baseline production and consumption levels. The baseline levels were established by averaging the production and consumption from the start of 2011 to the end of 2013, plus fifteen percent of 1989 HCFC and 0.42 percent of 1989 CFC levels. Baseline and cap allowances will be expressed in million metric tons of exchange value of equivalent (MMTEVe). MMTEVe is numerically equivalent to one million metric tons of CO2 equivalent (MMTCO2e), which is already commonly used in existing environmental sustainability studies. CO2 equivalent (CO2e) is a way to standardize emissions from various greenhouse gases based on their global warming potential (GWP). GWP’s convert the amounts of other greenhouse gases to the equivalent amount of CO2. The near-term goal established by the rule will be a ten percent reduction by the end of 2023, with the first major reduction set at a thirty percent drop by the end of 2028. Final production and consumption will be capped at fifteen percent of the baseline value by the start of 2036.

In addition to setting targets for the phaseout of HFCs, another primary drive of the new AIM Act is to foster innovation and investment into new technologies and practices that will be climate friendly and energy efficient. The Act will provide for investments to produce new HVAC technology or find substitutes to HFCs in current HVAC systems as well as developing practices to reduce overall energy consumption. The second part of the AIM Act will target maximizing reclamation and minimizing releases of HFCs from existing equipment. Finally, the Act will institute and enforce sector-based restrictions to facilitate the transition to next generation technologies.

This new Act highlights additional challenges to companies looking ahead at their E2SG (Environmental, Economic, Social, Governance) targets and data tracking requirements to comply with those targets. Collection and analysis of data pertaining to HFC production, or in most cases consumption, can typically be a daunting task. Compliance with the AIM Act may help a company achieve E2SG targets, but it is only part of a much larger challenge. Companies need to implement a proactive system that provides evidence that organizational goals are being achieved, especially as targets change.

EHS professionals from many different industries have historically relied on disparate systems for data collection and the tracking of information related to regulatory requirements. But now, the EHS+ Optimize strategy developed by Capaccio Environmental Engineering, Inc., provides a “single source, scalable solution to the overarching challenges that organizations and their EHS teams and programs of all sizes face in 2021 and beyond.” As covered in our recently published white paper, Now That You Have All of Your Data in One Spot – How to Use It, not all data management systems are created equally. That is why it is critical for a company to use a system, such as EHS+ Optimize, 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 overall business goals as well.

More information on the American Innovation and Manufacturing (AIM) Act and about EPA HFC phase down can be found on its website www.epa.gov/climate-hfcs-reduction. Additional information about Capaccio’s EHS+ Optimize can be found here.