Ban F-gases – and boost Europe’s economy!

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

Outlawing 'super-greenhouse gases' would be a quick win for Europe’s industry and the climate, argues Duncan Brack.

Duncan Brack is the former special advisor to the UK’s energy and climate change minister, and an associate of the Green Alliance.

In early December, the EU is due to agree the phase-down of a family of ‘super greenhouse gases’ known as hydrofluorocarbons (HFCs). Any attempt to shy away from bans in favour of a gradual phase-down in this regulation would be a mistake. Ambitious new bans on specific HFC use will boost the economy as well as the environment, costing less than many expect and positioning Europe as a leader in the global clean energy transition.

HFCs – industrial chemicals used in refrigeration and air-conditioning – are one of the fastest-growing sources of greenhouse gases. With global warming potentials (GWP) hundreds or thousands of times greater than carbon dioxide, they could account for up to 20% of global greenhouse gas emissions by 2050, compared to 1% today.

The timing for a new, more robust regulation could not be better. There will almost certainly be a global deal on phasing-down HFCs in the years ahead, with all major global players supporting action. The speed and depth of this phase-down is open to question but the direction is clear.

Businesses can see this. The Consumer Goods Forum, a global network of over 400 large companies such as Coca Cola and Unilever, has already pledged that its members will begin phasing out HFCs by 2015. Across Europe, supermarkets like Coop Schweiz, Coop UK, Marks & Spencer, Migros, Royal Ahold, Aldi Süd, Tesco and Waitrose are making particular efforts to reduce HFC use.  

Alternative technology is advancing quickly. In 2011, studies for the European Commission and the Montreal Protocol's Technology and Economic Assessment Panel concluded that cost-effective and energy efficient alternatives existed for all major HFC uses, overcoming one of industry’s main concerns; that moving to alternatives would increase energy use, causing greater emissions over their equipment’s lifecycle.

Indeed, some business sectors are already using a significant fraction of low-GWP alternatives in their new equipment. By 2010, hydrocarbons had grown to make up about 36% of the global market for domestic fridges, and are expected to reach 75% by 2020. Low-GWP alternatives were used in about 25% of industrial air conditioning equipment globally and in about 65% of large industrial refrigeration installations.

Just because an alternative is available does not mean it is cost-effective. Regulators must balance health and environmental benefits against the costs to industry. Thus the European Commission’s proposals focused on an economy-wide phase-down of HFCs, with outright bans restricted to a few small sectors. Yet trying to avoid bans has rendered the proposed regulation less cost-effective than it might have been.  

Applied at the right time, bans can help to drive change – and avoid locking-in outdated infrastructure. With HFCs, they reduce the reliance on expensive methods of containment and recovery. The best way to stop HFCs getting into the atmosphere is to stop producing them.

Unlike other measures, bans also provide producers, manufacturers and end-users with clear market signals, and spur necessary investments. Bans lock-in benefits for industrial sub-sectors capable of transitioning and stop laggard groups benefitting from the faster movements of others. Early movers should be rewarded.

Claims that the cost of bans would be prohibitive are extremely unlikely to be true. In many sectors, the lifetime costs of new technologies are marginal and may even be lower than existing technologies.

More broadly, the costs of new environmental regulations are frequently overestimated. Europe’s car industry recently met – and surpassed – new vehicle emission standards which they had bitterly opposed before 2008. Similarly, cost estimates of the US phase-out of CFCs in the 1990s show a steady fall, from the 1988 estimate of $3.55/kg to a 1992 estimate of $2.20/kg. Businesses and governments both have poor records when it comes to estimating the pace and scale of technological change.

Misleading economic models often portray the transition to higher environmental standards as a cost – rather than investment – option. But knowledge and ideas build on each other; new equipment enables new ideas and better technologies which in turn increase output and investment – a virtuous cycle known as endogenous growth. This has often happened with environmental regulation and will surely be demonstrated again with an HFC phase-out.

To achieve the optimum economic and environmental results, the EU should raise its sights. A stronger F-Gas Regulation presents an opportunity for stimulating innovation, improving efficiency standards and capturing new markets. An HFC ban, in areas where alternatives are available – such as commercial and industrial refrigeration – would be a sensible start.

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