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 issued 
119385

107258

119385

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.