REPORT FROM THE COMMISSION assessing the quota allocation method in accordance with Regulation (EU) No 517/2014
Date: 2017-07-13
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, air conditioning, air quality, environmental monitoring, environmental standard, gas appliance, greenhouse gas, heat pump, reduction of gas emissions, tradeable emission permit

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 13.7.2017  COM(2017) 377 final   REPORT FROM THE COMMISSION assessing the quota allocation method in accordance with Regulation (EU) No 517/2014   
 
 
1.  Introduction 

Regulation  (EU)  No  517/20141  (the  "F-gas  Regulation")  aims  to  create  an  efficient  and 
proportionate  mechanism  for  reducing  emissions  from  fluorinated  greenhouse  gases  to  help 
achieve the Union's climate targets.2 It also stimulates innovation and facilitates convergence 
towards  a  global  agreement  to  phase  down  hydrofluorocarbons  (HFCs)  under  the  Montreal 
Protocol.3 

Since  the  adoption  of  the  F-gas  Regulation  in  2014  the  international  negotiations  have 
progressed  well  and  in  October  2016,  197  countries  agreed  to  phase  down  the  global 
consumption  and  production  of  HFCs  under 
the  Montreal  Protocol  (the  "Kigali 
Amendment")4. This is a legally binding agreement which will help all countries achieve their 
commitments  under the Paris Agreement5. Developing countries can obtain support through 
the "Multilateral Fund for the Implementation of the Montreal Protocol" (Multilateral Fund), 
to which the EU Member States contribute.  

The  F-gas  Regulation  is  sufficiently  ambitious  to  ensure  that  the  EU  can  meet  its  global 
obligations under the Kigali Amendment. The main measure to achieve this is the "EU HFC 
phase-down", whereby the total quantities of HFCs that undertakings may import or produce 
in  the  EU  (i.e.  "place  on  the  market  for  the  first  time"),  are  reduced  gradually  until  2030 
(measured in CO2 equivalent).  

To  stay  within  the  annual  HFC  limit  in  a  given  year,  the  F-gas  Regulation  puts  in  place  a 
quota system. Since 2015 undertakings need quota to legally place bulk HFCs on the market 
and  the  Commission  allocates  quotas  to  undertakings  for  free  on  an  annual  basis.  The 
advantages  and  disadvantages  of  different  quota  allocation  options  were  examined  in  the 
impact  assessment  for  the  proposal  for  the  F-gas  Regulation3  and  the  options  to  allocate 
quotas for free, against a fee as well as through auctioning were considered in depth during 
the co-legislative process. At the time, there was some support for having a quota fee or an 
auctioning  system,  inter  alia  because  these  options  would  generate  revenue  that  could 
potentially be used to replenish the Multilateral Fund in case an HFC phase-down would be 
agreed  under  the  Montreal  Protocol  and  since  these  options  could  help  effective 
implementation. However, the final decision favoured free quota allocation while agreeing to 
monitor the functioning of the method put in place and the (potential) costs in Member States.  

1   OJ L 150, 20.05.2014, p.195. 
2   Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social committee and the Committee of the Regions: A policy framework for climate and energy in the 
period from 2020 to 2030, COM/2014/015 final: http://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:52014DC0015 

3   Commission Staff Working Paper: Impact Assessment – Review of Regulation (EC) No 842/2006 on certain 

fluorinated greenhouse gases, SWD(2012) 364 final: https://ec.europa.eu/clima/sites/clima/files/f-
gas/legislation/docs/swd_2012_364_en.pdf  

4   http://ozone.unep.org/sites/ozone/files/pdfs/FAQs_Kigali_Amendment_v3.pdf 
5   Communication from the Commission to the European Parliament and the Council: The Road from Paris: 

assessing the implications of the Paris Agreement and accompanying the proposal for a Council decision on 
the signing, on behalf of the European Union, of the Paris agreement adopted under the United Nations 
Framework Convention on Climate Change, COM(2016) 110 final: 
https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-110-EN-F1-1.PDF 

2 

 
 
                                                            
Consequently, Article 21(5) of the F-Gas Regulation calls on the Commission to: "publish a 
report  assessing  the  quota  allocation  method,  including  the  impact  of  allocating  quotas  for 
free,  and  the  costs  of  implementing  this  Regulation  in  Member  States  and  of  a  possible 
international agreement on hydrofluorocarbons. In light of that report the Commission shall 
submit, if appropriate, a legislative proposal to the European Parliament and to the Council 
with  a  view  to:  (a)  amending  the  quota  allocation  method;  (b)  establishing  an  appropriate 
method of distributing any possible revenues." 

This report is based on external technical work undertaken for the Commission and extensive 
consultations with stakeholders, including an online survey of affected undertakings as well as 
deliberations within the Consultation Forum6 established pursuant to Article 23 of the F-Gas 
Regulation.  

2.  Description of the quota allocation method  

According to the F-Gas Regulation, the quotas are allocated: 

 

 

to  "incumbent" undertakings  on the basis of "grandfathering",  i.e.  for 2015-2017 the 
annual  quotas  were  based  on  the  activities  of  each  EU  bulk  HFC  producer  and 
importer during the period 2009-2012, as reported under the previous Regulation (EC) 
No  842/2006  on  certain  fluorinated  greenhouse  gases.  From  2018  and  every  three 
years thereafter, a re-calculation based on more recent data will be made. 
from  a  reserve  on  the  basis  of  annual  company  declarations  stating  their  need  for 
quota.  Until  2018,  this  reserve  is  de  facto  allocated  to  "new  entrants"  only,  i.e. 
undertakings that did not report in the period 2009-2012. From 2018 new entrants and 
incumbents undertakings can acquire quota from the reserve on an equal footing. 

Quotas allocated to incumbents can be transferred to other undertakings. Conversely, quotas 
from  the  reserve  cannot  be  transferred.  This  is  to  prevent  undertakings,  which  are  not 
involved in the HFC trade, requesting free quotas with the sole purpose of selling these rights.  

HFCs are not only entering the EU through the import of bulk gases. HFCs are also contained 
inside imported equipment. If HFC equipment could be imported without any restrictions, it 
would jeopardise the environmental integrity of the phase-down and would be unfair  to  EU 
manufacturers  of  equipment  that  use  HFCs  bought  on  the  EU  market  being  subject  to  the 
phase-down.  Thus,  the  F-gas  Regulation  requires  that  HFCs  contained  in  refrigeration,  air 
conditioning and heat-pump equipment (the so-called "RAC equipment") that is placed on the 
market must be accounted for within the quota system from 1 January 2017. For importers of 
HFC  equipment  this  implies  that  they  need  authorisations  from  quota-holders  to  use  the 
latter's quota for their imports.7  

At the time of the adoption of the F-gas Regulation, the option of allocating quotas directly to 
equipment  importers  based  on  grandfathering  was  discarded  due  to  a  lack  of  data.  Both 
incumbent  and  new  entrant  quota  holders  can  authorise  the  use  of  their  quota  to  equipment 
importers,  but  new  entrants  must  also  prove  the  physical  supply  of  the  corresponding  gas 

6  https://ec.europa.eu/clima/events/articles/0106_en  
7 Unless the HFCs thus imported were previously placed on the market in the EU, exported and charged into the 

equipment before its import 

3 

 
 
                                                            
quantities to ascertain that they are active in the gas trade. An authorisation counts against the 
quota holders' quota in the year it is given. Conversely, for the equipment importer there is no 
time  limit  for  using  the  authorisation.  Thus  an  authorisation  given  in  2015  may  be  used  in 
2017 or later years.  

3.  Assessment of the allocation method 

a.  Quota holders and quota use 

About  1 100  undertakings  are  currently  affected  by  the  quota  allocation  method,  of  which 
approximately two-thirds are HFC "quota  holders" (bulk producers and/or importers),  while 
the  remaining  undertakings  are  importers  of  equipment.8  78  incumbent  undertakings  have 
received  a  quota  every  year  based  on  their  HFC  related  activities  in  the  period  2009-2012.9 
The number of new entrants is considerably larger and has been growing every year. In 2017, 
579  undertakings  were  new  entrants,  representing  an  increase  of  73%  since  2015.  Some  of 
these new entrants seem to be linked to each other and/or to incumbent market players.  

The  allocation  method  for  incumbent  companies,  based  on  historic  consumption,  grants 
existing undertakings a stable initial market position. Over time the share of quota available to 
these incumbents will decrease more quickly than the overall market (as it reduces following 
the  phase-down  steps),  meaning  the  market  share  of  quota  allocated  to  present  incumbents 
will decrease over time. The reserved amounts for new entrants comprised 11% of the overall 
quota at the start of the phase-down in 2015. Due to the procedure for determining quotas10, 
the absolute amounts available from this reserve will remain more or less stable over time. On 
the other hand, as the overall market is shrinking following the HFC phase-down, the relative 
share of quota allocated from the new entrant reserve will increase over the years. By way of 
example,  over  50%  of  the  total  quota  will  be  allocated  from  the  reserve  in  the  final  phase-
down year 203011.  

It is apparent that the declarations of future need made by companies to obtain quota from the 
reserve  are  generally  not  based  on  a  realistic  assessment  of  expected  sales.  New  entrant 
undertakings  alone  (bidding  for  11%  of  the  market  initially)  requested  quota  that  exceeded 
several times the total amount available for the whole EU market. These excessive requests 
for quota by companies imply that only a few undertakings receive the amount requested. All 
other  companies  bidding  for  quota  from  the  reserve  all  receive  the  same  pro  rata  share12. 
Since  the  number  of  requests  has  been  increasing  every  year  while  the  reserve  amount 
remains  largely  the  same,  the  maximum  quota  allocated  per  company  from  the  reserve  has 
been decreasing from year to year.  

A re-calculation cycle for the allocation of the quotas based on consumption in previous years 
will  turn  new  entrants  into  incumbents  every  three  years.  By  way  of  example,  new  entrant 

8   Estimation based on the yearly declarations for quota and annual ex-post company reporting from equipment 

importers pursuant to Article 19 of Regulation (EU) No 517/2014 

9   Originally 79 in Commission implementing decision 2014/774/EU, but one company merged with another 
incumbent in 2015. http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:JOL_2014_318_R_0008  

10   Pursuant to Annex VI of Regulation (EU) No 517/2014 
11   This follows from the calculation method in Annex VI of Regulation (EU) No 517/2014 
12   Slightly more than the pro rata share as the allocation mechanism comprises several allocation rounds where 

left-over quota from the first round is redistributed in subsequent rounds (see Annex VI of the F-gas 
Regulation) 

4 

 
 
                                                            
undertakings  starting  in  2015  will  become  incumbents  from  2018  onwards  and  will  receive 
quota on the basis of the HFC quantities that they have lawfully placed on the market. At the 
same time they will have the possibility to obtain additional quota from the reserve.  

The  only  year  for  which  company  ex  post  reporting  data  is  currently  available  is  2015.13 
These  data  show  that  the  phase-down  had  been  overachieved  in  2015.  The  total  quantities 
reported were 8% under the allowable limit.14 A number of companies did not fully use their 
allocated  quotas,  with  new  entrants  being  generally  less  efficient  than  incumbents. 
Stakeholders  noted  that  this  is  possibly  due  to  (i)  a  lack  of  understanding  of  the  new  rules 
including  the  difference  between  quotas  and  authorisations,  (ii)  the  need  to  also  ensure 
compliance  with  REACH  obligations  that  some  new  entrants  may  not  have  realised  when 
applying for quota as well as (iii) the fact that many undertakings had prepared for the phase-
down by increasing their imports in 2014, just before the phase-down began (so they may not 
have needed the full quota anymore in 2015). A number of stakeholders also highlighted that 
efforts  on  all  sides  would  still  be  needed  so  that  all  players on  the  market  –  especially  pre-
charged  equipment  manufacturers  and  their  importers  as  well  as  new  entrants  –  better 
understand their role in the phase-down.15  

In 2015 only a few undertakings exceeded their quota limit. The Commission has followed up 
on  non-compliance  cases,  supported  by  the  Member  State  authorities,  in  view  of  imposing 
sanctions in line  with  the F-gas  Regulation  (deducting  twice the amount of excess from the 
company's future quota) and ensuring that penalties are also imposed at national level.  Non-
compliance  is  detected  by  comparing  the  quota  allocated  and  the  reported  values  that  have 
been verified by an independent auditor. In addition, customs can check if importers of bulk 
gases  and  HFC  equipment  are  registered  in  the  HFC  Registry  and  have  a  quota  or 
authorisations.  

b.  Quota transfers and authorisations 

The  possibility  for  incumbents  to  transfer  quotas  did  not  result  in  major  changes  as  to  how 
quota was distributed between companies. Transfers were to a very large degree limited to a 
few  transactions  between  major  incumbents,  partly  due  to  restructuring,  as  well  as 
undertakings  leaving  the  market.  There  seemed  to  be  little  willingness  to  trade  quotas  with 
other market players beyond these particular transactions. 

Conversely, the option of issuing quota authorisations was widely used in 2015 and 2016, as a 
number of equipment importers were preparing for the obligation to  have authorisations for 
importing refrigeration, air conditioning and heat-pump equipment from 1 January 2017. Of 
the  total  quota,  9%  and  12%  were  authorised  to  equipment  importers  in  2015  and  2016, 
respectively.  For  comparison,  the  share  of  HFCs  in  imported  refrigeration,  air  conditioning 
and heat-pump equipment of the total supply of HFCs to the EU in 2015 was 7 %, according 
to  company  reporting.  Despite  these  preparatory  activities  taking  place,  some  equipment 
importers expressed in the survey a number of reservations linked to proper understanding of 
the  rules,  difficulties  in  planning  their  demand  or  finding  quota  holders  willing  to  sell 
authorisations as well as high prices for authorisations. In order to address these concerns, the 

13   Pursuant to Article 19 of Regulation (EU) No 517/2014 
14   DG CLIMA, October 2016: https://ec.europa.eu/clima/sites/clima/files/f-gas/docs/phase-

down_progress_en.pdf  

15   Consultation Forum, 1 December 2016. https://ec.europa.eu/clima/events/articles/0106_en  

5 

 
 
                                                            
HFC Registry16 was modified to allow the delegation of authorisations, so that a company can 
coordinate  the  acquisition  of  authorisations  for  a  group  of  importers.  For  instance,  foreign 
equipment manufacturers can obtain the relevant authorisations and delegate them further to 
those  companies  importing  the  equipment.  This  new  feature  is  expected  to  facilitate 
compliance,  in  particular  for  importers  of  small  amounts,  typically  SMEs  and  micro-
enterprises. This measure was widely welcomed by stakeholder organisations. 14 

c.  Price developments  

The  sector  using  HFCs  is  quite  complex  and  involves  a  number  of  different  types  of 
undertakings: HFC producers (global actors), manufacturers of various equipment or products 
(global),  importers  of  equipment  or  products  (EU),  bulk  gas  distributors  (EU),  equipment 
installation  and  service  undertakings  (EU)  and  end-users  of  the  various  equipment(EU).  In 
order  to  follow  the  impact  of  the  quota  system,  price  developments  for  different  types  of 
HFCs  and  at  different  levels  in  the  value  chain  are  monitored  on  the  basis  of  data obtained 
from refrigerant producers, gas distributors and equipment manufacturers. Although it is not 
possible to draw definite conclusions at this early stage of the phase-down, it is nonetheless 
possible  to  observe  a  general  upward  trend  of  prices  since  2014.  This  increase  is  most 
noticeable  in  the  purchasing  prices  of  gas  distributors  and  to  a  lesser  degree  service 
undertakings,  while  not  (yet)  as  apparent  for  gas  bought  by  EU-based  equipment 
manufacturers,  possibly  due  to  their  longer-term  agreements  with  gas  producers.  The 
observed  price  increases  vary  for  different  types  of  HFCs,  and  generally  show  a  higher 
increase for HFCs with high global warming potential (GWP). It is also noteworthy that the 
costs of obtaining authorizations importing HFC equipment appear to be similar to bulk HFC 
price increases at distributor level, if converted into €/t CO2eq.  

These price increases are an expected and desirable consequence of the phase-down measure, 
as the intention of this market measure was to restrict supply of high GWP gases in order to 
stimulate the innovation and use of lower GWP substances and non-HFC alternatives. At the 
same time, since the quotas are allocated for free, some actors may benefit from these price 
increases. Some stakeholders pointed out that quota holders were the ones profiting and that it 
would be more sensible to instead set up a system that would generate revenue which could 
be  used  for  supporting  domestic  and  international  implementation  of  HFC  reductions  and 
where equipment importers could also get their own quota.14 

4.  Costs of implementing the Regulation in Member States 

The  F-gas  Regulation  relies,  to  a  large  degree,  on  obligations  already  put  in  place  by  the 
previous Regulation (EC) No 842/200617, in particular as regards preventing emissions from 
equipment  such  as  leak  checks  and  repairs,  certification  and  training  schemes  in  Member 
States,  labelling  of  equipment,  reporting  and  end-of-life  recovery.  In  an  evaluation  of  the 
previous  Regulation  (EC)  No  842/2006,  the  costs  for  the  public  administrations  in  the 
Member  States  of  implementing  and  applying  these  measures  were  estimated  at  EUR  11.4 

16 Pursuant to Article 17 of Regulation (EU) No 517/2014 
17 OJ L 161, 14.06.2006, p.1. 

6 

 
 
                                                            
million per year.18 This amount includes costs for personnel in authorities, measures to raise 
awareness and enforcement measures such as inspections.  

The main novelty in the F-gas Regulation, the HFC phase-down, has not increased the costs 
for  the  public  administrations  in  the  Member  States  significantly.  Due  to  the  central 
management of the phase-down by the European Commission19, these costs are borne by its 
existing multi-annual administrative budget. The European Commission is, inter alia:  

  managing  the  F-gas  Portal  and  the  HFC  Registry  for  registration  of  undertakings, 

quotas, quota transfers and quota authorisations; 

  managing  ex-ante  quota  declarations  for  quota,  recalculating  new  quota  reference 

values every three years and uploading new quotas on a yearly basis; 

  overseeing the yearly ex post reporting by undertakings in a system, managed by the 

European Environmental Agency;  

  checking  on  the  basis  of  ex  post  reporting  if  undertakings  have  complied  with  their 
quota  limits  and  applying  quota  penalties  in  form  of  deductions  from  future  quota 
allocations; 

  checking  on  the  basis  of  ex  post  reporting  if  importers  of  HFC  equipment  have  the 

required quota authorisations; and 

  providing guidance to undertakings on use of the F-gas Portal and the HFC Registry 

and obligations related to the quota system.  

The costs for Members States in relation to the phase-down are therefore limited to providing 
further guidance to stakeholders, ensuring effective border controls including the training of 
customs officers as well as following up on non-compliance issues including illegal trade.  

More  generally,  the  costs  to  industry  of  implementing  the  measures  already  included  in  the 
previous Regulation (EC) No 842/2006 were estimated previously to be around EUR 1 billion 
in 2015, rising to EUR 1.5 billion in 203020. In addition, the costs related to the HFC phase-
down were estimated to be around EUR 1.5 billion/year21. However, in reality the costs are 
expected to be lower. The first figure is based on the assumption that the use of HFCs would 
not  decrease until 2030, but  with the launch of HFC phase-down under the new Regulation 
their use will be drastically reduced. The second figure was conservatively based on available 
information  in  2010  only.  Thus,  it  does  not  take  into  account  new  technologies  that  have 
emerged  since  then  and  the  declining  trend  in  costs  of  climate-friendly  technologies.  Still, 
when comparing  these numbers with  the significant reduction  in  emissions  achieved, the F-
gas  measures are very cost-efficient compared  to potential actions in other sectors.  Average 
abatement costs were estimated, based on technology available in 2010, to be €16/tonnes CO2 
equivalent.3 Energy efficiency gains are likely to offset additional upfront investment costs. 

5.  Costs of Kigali Amendment to the Montreal Protocol 

The implementation of the Kigali Amendment is estimated to avoid a temperature increase of 
almost  0.5  degree  Celsius  by  the  end  of  the  century,  thus  contributing  significantly  to  the 

18 Oeko-Recherche et al. (2011). https://ec.europa.eu/clima/sites/clima/files/f-gas/docs/2011_study_en.pdf  
19 As well as the European Environmental Agency 
20 Oeko-Recherche et al. (2011). https://ec.europa.eu/clima/sites/clima/files/f-gas/docs/2011_study_en.pdf  
21 European Commission COM(2012) 643 final Impact Assessment (2012). 

https://ec.europa.eu/clima/sites/clima/files/f-gas/legislation/docs/swd_2012_364_en.pdf  

7 

 
 
                                                            
goals of the Paris Agreement on climate. The F-gas Regulation will enable the EU to meet its 
commitments  under  the  Kigali  amendment  until  2030,  the  last  year  for  which  a  target  is 
included  in  the  F-gas  Regulation.  The  Kigali  Amendment  will  also  guarantee  that  all  other 
ratifying countries will take measures to reduce HFCs. This will put European undertakings 
on a more equal footing with their competitors abroad. Furthermore, the global transition to 
climate-friendly technologies is expected to result in increased investments in innovation and 
lower  prices  of  alternative  technologies  due  to  economies  of  scale.  This  creates  business 
opportunities for front runners, such as the EU industry. 

The  Kigali  Amendment  implies  that  Member  States  will  have  to  contribute  more  to  the 
Multilateral Fund in the future. Exact amounts cannot be calculated at this point in time. The 
amounts will depend on future negotiations, which are conducted on a triennial basis between 
developed and developing parties of the Montreal Protocol as well as detailed parameters such 
as cost eligibility criteria for phasing-down HFCs, which are still to be agreed.  

Nonetheless,  the  technical  body  of  the  Montreal  Protocol,  the  Technology  &  Economic 
Assessment  Panel  (TEAP),  calculated  cost  ranges  until  2050  for  the  four  HFC  amendment 
proposals before the Kigali meeting to aid the negotiations22. These rough estimates may give 
an indication of the magnitude of funding needed. The TEAP analysis23 showed cost ranges 
for the proposals between EUR 3 200-5 000 million for the cheapest and EUR 8 800-13 400 
for the most expensive proposal. Considering the obligations agreed in the Kigali amendment, 
the  costs  are  likely  to  be  higher  than  the  lowest  estimate  and  considerably  lower  than  the 
highest  estimate.  While  stressing  the  high  uncertainty  linked  to  these  approximations,  the 
annual funding need would be likely to be a least EUR 100 million per year of which Member 
States  would  have  to  contribute  about  50%  in  accordance  with  the  contribution  scale 
determined by the United Nations.24  

This  amount  appears  rather  moderate  in  comparison  with  the  commitment  of  developed 
countries in the context of the Paris Agreement to make USD 100 billion available for climate 
finance per year until 2025. 

6.  Conclusions 

At this point in time only one full "annual" cycle of the phase-down has been completed25 and 
the  inclusion  of  refrigeration,  air  conditioning  and  heat  pump  equipment  under  the  phase-
down  has  only  begun  very  recently,  on  1  January  2017.  There  are  also  indications  that  the 

22   Decision EX.III/1 Working Group Report UNEP TEAP, 2016: On the climate benefits and costs of reducing 
the  Dubai  Pathway.  http://conf.montreal-protocol.org/meeting/mop/mop-

hydrofluorocarbons  under 
28/presession/Background%20Documents%20are%20available%20in%20English%20only/TEAP_ExIII-
1_Report_Sept-2016.pdf  

23   Note the calculations are not based on the exact obligations of the Kigali Amendment proposals. In addition 
to uncertainties related to producing such long-time projections, further limitations are that a number of costs 
such  as  for  project  preparation,  capacity  building,  institutional  strengthening  etc.  were  not  included  in  the 
analysis  and  current  MLF  cost  guidelines  for  conversions  from  hydrochlorofluorocarbons  (HCFCs)  were 
employed, which may be set differently for HFCs. 

24   UN  (2015)  Resolution  adopted  by  the  General  Assembly  on  23  December  2015:  70/245.  Scale  of 
Nations 

Assessments 
expenses 
http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/245   

apportionment 

United 

the 

the 

for 

25   One "annual" cycle of the phase-down comprises quota allocation, quota use, ex post company reporting and 

of 

of 

subsequent compliance checking by the Commission. It takes roughly two years to complete the cycle. 

8 

 
 
                                                            
data currently available is still affected by an initial lack of understanding by stakeholders. It 
is  therefore  too  early  for  an  in-depth  assessment  of  the  functioning  of  the  phase-down 
mechanism and to thoroughly appreciate all possibly impacts of the chosen quota allocation 
method.  

Nonetheless,  the  analysis  undertaken  and  the  consultation  of  stakeholders  indicate  that  the 
phase-down  is  functioning  as  it  should.  The  price  development  is  fully  in  line  with 
expectations and there is good compliance with the total EU HFC limit. The chosen allocation 
method allows on the one hand for stability in the market and, on the other hand, flexibility 
for new market players to enter the market.  

While noting that undertakings will have to reduce their sales of HFCs under the phase-down, 
the  allocation  of  quotas  for  free  may  benefit  some  actors  on  the  market  more  than 
others.  In  addition,  the  availability  of  free  quota  on  simple  request  from  the  reserve  has 
significantly increased the number of players with only small quota amounts. It will require 
further monitoring to see how this situation for small and for new gas importers develops in 
the  coming  years.  In  addition,  the  market  situation  of  equipment  importers  which,  in  the 
current allocation system, depend on quota holders to obtain authorisations for their imports, 
also requires continued monitoring.  

The current method allows, based on the online F-gas Portal26, to implement the quota system 
by the European Commission with little extra burden on, or costs to, Member States. It is in 
this  way  enabling  a  successful  implementation  of  the  phase-down  and  safeguarding 
environmental  ambition.  Most  of  the  recurrent  costs  in  Member  States  are  a  result  of 
obligations  already  established  by  the  previous  Regulation  (EC)  No  842/2006.  However, 
Member States will be asked to make increased contributions to the Multilateral Fund in the 
future  to  finance  the  Kigali  Amendment,  in  line  with  their  obligations  under  the  Montreal 
Protocol. 

In  light  of  the  above  findings  the  Commission  does  not  intend  to  amend  the  quota 
allocation  method  at  this  time.  The  Commission  will  instead  focus  on  enabling  a  smooth 
implementation  of  the  existing  method  and  helping  all  stakeholders  better  understand  and 
comply  with  their  obligations,  in  order  to  make  the  EU  HFC  phase-down  a  success.  At  the 
same  time  the  Commission  will  continue  monitoring  the  functioning  of  the  allocation 
method  and  its  impacts  closely  while  noting  that  a  comprehensive  review  of  the  F-gas 
Regulation is required by 31 December 2022.  

26   The  F-gas  Portal  includes  the  HFC  Registry  according  to  Article  17  of  Regulation  (EU)  No  517/2014  and 
provides the link to the reporting tool according to Article 1 of Commission Implementing Regulation (EU) 
No 1191/2014. https://webgate.ec.europa.eu/ods2/resources/home?domainKey=fgas  

9