As part of the AIM Act, the EPA is phasing down production and consumption of HFCs to 15% of their baseline levels in a stepwise manner by 2036 through an allowance allocation and trading program. EPA has issued allowances to entities that produced and/or imported HFCs in 2021 and/or 2022, based on the three highest years of production or consumption between 2011 and 2019. EPA has also issued allowances to entities that were previously allocated allowances as new market entrants on March 31, 2022.
An allowance is the unit of measure that controls production and consumption of bulk HFCs. EPA issues allowances that will be valid between January 1 and December 31 of a given year. This calendar-year allowance represents the privilege granted to an entity to produce or import bulk-regulated substances (i.e., regulated HFCs) in that year.
Entities must expend allowances in order to produce or import bulk HFCs. Producing HFCs requires expending both production allowances and consumption allowances, while importing HFCs requires expending only consumption allowances. Entities must expend the correct number of allowances for each kilogram of HFCs that they produce and/or import, or else they can be subject to administrative consequences.
These consequences involve allowance adjustments issued by the EPA in response to specific activities, such as submitting false, inaccurate, or misleading information or data; importing HFCs without expending the required number of allowances; and failing to provide required reports consistent with the regulatory requirements, among others. Using its authority, the EPA can retire, revoke, or withhold allowances, or ban a company from receiving, transferring, or conferring allowances.
EPA recently finalized a number of independent administrative consequences for a variety of companies. In the instances where EPA revoked calendar year 2025 consumption allowances, the allowances were taken back from an allowance holder and redistributed to all other allowance holders.
The allowances issued for 2025 are shown in the figures below. Figure 1 shows allowances for entities receiving greater than 0.5% of all consumption allowances in 2025, while Figure 2 illustrates the production allowances allocated to each entity for 2025. More information about the HFC allowances issued for 2025 can be found here.
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FIGURE 1: Distribution of HFC consumption allowances for 2025, with entities receiving greater than 0.5% of all consumption allowances. (Courtesy of EPA)
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FIGURE 2: HFC production allowances allocated to each company for 2025. (Courtesy of EPA)
