UPDATE: HFCs to be taxed in France?

The consultation document estimates that the French HFC tax could lead to reductions in HFCs of up to 50% by 2020 and 80% by 2030. The yearly cost could amount to €350 per unit for a small business and up to €254,000 for a hypermarket. Although this has caused concern among French HVAC&R stakeholders, the Danish experience reveals that a transition without ‘Melted Butter and Hot Beers’ is indeed possible, and presents new business openings for those willing to embrace the opportunity.

Four different options being considered for HFC tax

The French government outlines 4 different tax options in the consultation document:

• Option 1: The tax rate is uniformly set at €40 per tonne of CO₂ eq for refrigerants with a Global Warming Potential (GWP) above 150.
• Option 2: The tax rate is set €20 per tonne of CO₂ eq for refrigerants with a GWP above 150.
• Option 3: The tax rate is set at €20 per tonne of CO₂ eq for refrigerants with a GWP higher than 750. Refrigerants with a GWP of between 150 and 750 would benefit from a reduced level of tax in order to promote investment in lower GWP refrigeration fluids, and to provide further incentive for the development of lower GWP gases, those with a GWP of between 300 and 750. For gases with a GWP of between 150 and 300 the tax rate would be set at €2.5 per tonne of CO₂ eq and for gasses with a GWP between 300 and 700 the rate of tax would be set at €5 per tonne of CO₂ eq. For gases with a GWP of above 750 the tax rate would be set at €20 per tonne CO₂ eq.
• Option 4: The tax rate is set at €60 per tonne of CO₂ eq for refrigerants with a GWP above 150.

4^th option could result in savings of 12 million tonnes of CO₂ eq by 2030 due to the reductions in emission levels, improvement of containment measures, reduction of refrigerant charges, but especially as a result of a faster and more significant introduction of low GWP refrigerants in all sectors. 3^th option could contribute to savings of 8 million tonnes of CO₂ eq by 2030.

Taxation of HFCs based on their GWP would not only stimulate the demand for installations using low GWP refrigerants, but also encourage R&D activities in these fluids. It is likely that the measure would allow France to catch up with other large European markets, such as the UK and Germany in terms of CO₂ technology in supermarkets.

Decision on future HFC tax to be announced in mid-June

In April, the French Environmental Taxation Committee (CFE) submitted its evaluation of the proposed HFC tax to the French Government. The tax proposal is now in the hands of Delphine Batho, Minister of Ecology, who is expected to make an announcement on the matter in mid-June.

Overall the CFE endorses a tax, which it argues would help to draw attention to the high levels of HFC refrigerant emissions in France. The CFE recommends that the necessary economic instruments are put in place to facilitate the achievement of an emission reduction and that such instruments should complement the upcoming changes to the European F-gas regulation.

Australian and Danish experience with HFC taxes

Denmark introduced a tax on HFCs back in 2003, and despite fears that the tax would present too great a burden for industry, the country’s national F-Gas Regulation brought about pioneering CO₂, hydrocarbon and ammonia HVAC&R technologies and new business ventures. Key to the success of the Danish HFC tax was the establishment of an “HFC-free Centre” to provide free advice and assistance on what kind of refrigeration system to choose (up to 5 hours of engineering consultancy).

Starting 1 July 2012, a carbon equivalent price on imports of HFCs also came into effect in Australia, increasing the price refrigerants with high GWP by more than three times. Whilst the price shock will require the industry to adapt to the new pricing it is predicted to accelerate the shift to alternatives and lead to growth in the HVACR.

Reaction from key French stakeholder SNEFCCA

SNEFCCA (Syndicat National des Entreprises du Froid, d’équipments de Cuisines Professionelles et du Conditionnement d’Air) is in general opposed to the introduction of this tax. According to SNEFFCA the tax would present an additional burden on industry, which will already be subject to the revised European F-Gas Regulation that will introduce use restrictions on HFCs. They also point to the fact that the tax would only target HFCs used in refrigeration and air conditioning and not those used in other applications. SNEFCCA has calculated that the tax would increase costs by 15 to 20%.