HCFC-22 and HCFC- 142b Allocation Adjustments: 

The 2009 Final Rule vs. 2011 Interim Final Rule 

Background

In the 2009 Final Rule, approximately 45,400 metric tons (MT) of HCFC-22 

consumption and approximately 100 MT of HCFC-142b consumption (both aggregate, 

nationwide totals) were allocated to the allowance holders identified at 40 CFR 82.17 and 82.19 

for 2011. While the same methodology used in the 2009 Final Rule is being used in the 2011 

Interim Final Rule, and the number of consumption allowances is about the same, the actual 

number of production allowances given to companies is different in this rule. This is a result of 

the way EPA allocates production and consumption allowances under Title VI of the Clean Air 

Act (CAA). 

To allocate allowances, EPA uses the following formula for each HCFC: 

Step 1: Add up all company-specific consumption baselines. 

Step 2: Determine how much consumption the market needs for a given year, taking into 

account recycled and reclaimed material. 

Step 3: Divide calendar-year consumption needs (Step 2) by the aggregate amount of 

baseline allowances (Step 1). 

Step 4: The resulting percentage is listed in the table at section 82.16 and becomes what 

each company is allowed to consume in a given control period. 

Historically, EPA has allocated the same percentage of baseline allowances for HCFC 

production as it does for HCFC consumption. The above-described methodology is being used in 

the Interim Final Rule for 2011. 

For 2011, the estimated demand for HCFC-22 is 57,900 MT based on the 2009 Servicing 

Tail Report1

. EPA is allowing for 12,500 MT of HCFC-22 demand to be met with recovered and 

reclaimed material to encourage a smooth transition to 2015, when the U.S. must reduce its 

HCFC production and consumption to 10 percent of its baseline. This results in a total of 45,400 

MT of HCFC-22 consumption allowances for 2011. Since the aggregate HCFC-22 baselines are 

increasing due to Arkema and Solvay’s 2008 inter-pollutant transfers, the percentage of baseline 

allowed in 2011 must decrease to get to the same actual number of calendar-year allowances 

(45,400 MT). While consumption levels are roughly the same, there are slight differences in the 

number of production allowances for HCFC-22 and HCFC-142b. 

 This occurs because the aggregate HCFC-22 production baseline increased less than the 

aggregate consumption baseline relative to the 2009 Final Rule due to Arkema, Inc.’s transfer of 

both production and consumption baseline allowances. Solvay, on the other hand, only 

transferred its baseline consumption allowances. The increase in aggregate baseline production is 

therefore less than the increase in aggregate baseline consumption (see the table below). Since 

 

1 The Servicing Tail Report is an EPA document included in the docket for this rulemaking (EPA-HQ-OAR-2010-

1040) analyzing the servicing demand for the HCFC appliances in the U.S. refrigeration and air-conditioning sector 

projected to be in service between 2010-2019. EPA has issued and sought comment on three versions of the draft 

report as part of the rulemaking establishing HCFC allowances for 2010-2014.
the allocation percentage is chosen with the goal of getting the aggregate number of consumption 

allowances to match what is in the 2009 rule, when that same percentage is applied to the 

production baseline, calendar-year production decreases. The end result is more HCFC-142b 

production allowances and fewer HCFC-22 production allowances relative to the 2009 Final 

Rule. 

HCFC-22 Allocation in 2009 Final Rule vs. 2011 Interim Final Rule

 2009 Final Rule 2011 Interim Final Rule 

 Consumption Production Consumption Production 

Aggregate 

Baseline 

(MT) 

119,384 110,619 141,865 129,093 

% Change in 

Baseline - - 18.9% 16.7% 

% Allocated 38% 38% 32% 32% 

2011 

Allowances 

(MT) 

45,366 42,035 45,397 41,310 

% Change 

from 2009 

Final Rule 

- - 0.15% -1.73% 

Slight rounding differences result in small changes in production and consumption, but 

since production baselines increased by a smaller percentage than consumption baselines, fewer 

calendar-year production allowances are allocated compared to the 2009 Final Rule by using the 

same percentage of baseline as for consumption allowances. 

HCFC-142b Allocation in 2009 Final Rule vs. 2011 Interim Final Rule

 2009 Final Rule 2011 Interim Final Rule 

 Consumption Production Consumption Production 

Aggregate 

Baseline 

(MT) 

21,089 25,090 2,047 9,444 

% Change in 

Baseline - - -90.3% -62.4% 

% Allocated 0.47% 0.47% 4.9% 4.9% 

2011 

Allowances 

(MT) 

99.1 117.9 100.3 462.8 

% Change 

from 2009 

Final Rule 

- - 1.20% 292.42% 

Slight rounding differences result in small changes in production and consumption, but since 

production baselines decreased by a smaller percentage than consumption baselines, significantly 

more calendar-year production allowances are allocated compared to the 2009 Final Rule by 

using the same percentage of baseline as for consumption allowances.