# Combs Investment Property HCFC-22 Inventory Trends

July 15, 2013

# Combs Investment Property

HCFC-22 Inventory Trends Critical Business Issues
• An excess supply of allowances from 2009 to the 2013 has resulted in allowances being used for the purchase of inventory or going unspent, rather than actually being consumed • High inventory levels will discourage the development of additional recovery capabilities • The additional recoupment allowances issued in 2013 (and 2014) have aggravated this balance even further • The 2015-2019 control period offers an opportunity to address the imbalance by further limiting the quantity of new allowances issued119385
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93064 119385

98566 119385

92709 119385

58173 50022 42963 45397 42122 25110 E st.

24608 28490 ??? 23099 ??? 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 

## MT

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

## Year Issued Consumed Through 2012 The Consumption Of All Allocated Allowances

Was ~ 20% Below The Quantity Issued 

# MT of HCFC-22 Allocated vs Spent

* 2013 and 2014 allocations quantities include 2954 MT each year of recoupment allowances * From 2005 – 2011 consumption data made public by EPA with estimates for 2012 indicated during the June 20, 2013 meeting with L. Hall-Jordan * Allocation total reflects the consolidated quantities for Coolgas and CIP

# The Allocation of HCFC-22 Allowances

Market Impact of Rule Making

• The allocation of HCFC-22 in the 2012-2014 Final Rule established a meaningful step down from 50,021 MT in 2010 to 20,144 MT in 2014 without recoupment allowances. • In 2012 and 2013, the market showed signs of tightening which is needed to support a viable recovery market and this indicated that the reduction of the total quantity of allowances available over these two years was in the appropriate range. • The additional recoupment allowances issued in 2013 and 2014 have resulted in a substantial oversupply of allowances and immediate softening of the market by adding an additional 5907 MT or 13% to the supply. Thus, the quantity of allowances issued increased between 2012 and 2013, when it should have been reduced in each subsequent year. • The 2015-2019 control period offers an opportunity to address this imbalance.100.0 100.0 112.7

41.9 94.1

32.0 113.6

17.7 98.6

18.0 86.6

14.2

0 20 40 60 80 100 120 140 

### Index 2009 = 100
2009 2010 2011 2012 2013 2014



## Starting Inventory (Jan. 1st) Inventory % HCFC-22 of Baseline Allocated 

## ` CIP's Annual Inventory Levels Have Remained Relatively High While The % Of Baseline Allocated Each Year Has Decreased 

# Combs Investment Property Indexed MT of HCFC-22 Inventory

* Quantities include Coolgas inventories from January 2009 – June 2012 and CIP thereafter. Est

# Combs Investment Property

HCFC-22 Inventory Trends

• There is still significant inventory going into the 2015 – 2019 control period • Keeping the allocation level at the 2014 level will likely result in a continued surplus of R22 • The additional 5907 MT recoupment allowances (13% of 2013/2014 total) has exacerbated the oversupply even further • This oversupply results in continued challenges for the recovery market as they must compete with this virgin product

# Combs Investment Property

HCFC-22 Inventory Trends

Summary

• The EPA should give due consideration to the current and projected HCFC-22 inventory levels when determining the level of HCFC allowances that should be allocated for the 2015 –2019 control period and seek this data from all relevant stakeholders. • The allocation level will likely need to be reduced significantly below the maximum allowed HCFC cap to support a viable recovery market • The additional 5907 MT recoupment allowances (13% of the 2013/2014 total) should be removed from the 2015-2019 control period after the step-down is established for this period, to offset the additional allowances introduced by this action in 2013/2014.