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Closing the net on the black market

It is fair to say that historically, highly regulated products make the trading of goods ‘under the radar’ a more attractive option for operators at the fringes of the market. As the F-Gas Regulations quota system will increasingly restrict the supply of higher GWP HFC refrigerants, it’s possible that such a ‘black market’ trade may increase. Dr Stuart Corr, techno-commercial director of Mexichem’s Fluor Business Group, discusses the details and what the industry can do to combat this.

As the large 2018 reduction in F-Gas quota availability draws closer, industry attention is focussing on how the move away from widely used, higher GWP HFC refrigerants such as R-404A can be managed. Given the slow speed of this move to date, it is possible that we will face a situation where demand for the likes of R-404A begins to outstrip the volume that suppliers are permitted to place on the market.

This may lead some in the market to seek alternative options in securing these HFCs, which can lead to a number of problems. In some cases, HFCs can be deliberately or unwittingly mixed with lower quality, counterfeit or illegally imported HFCs. With few checks and controls in place, such HFCs could result in reliability or performance problems with little or no comeback on the supplier – in effect, those operating in such a fashion take their chances.

By nature, black markets can have the effect of distorting economic data because transactions are undocumented. As a result, it is almost impossible to give a true estimate of the amount of illegal HFC imports in Europe. Unregulated importers, trading outside of the F-Gas quota, have no responsibility to report to the European Commission, making this underground trade even harder to police. 

There are several actions the industry as a whole can take to ensure black market trading does not increase. First, buy from a reputable supplier who is happy to confirm their entitlement to quota. Secondly, those currently using higher GWP HFCs such as R-404A should seek alternatives as soon as possible. Lower GWP HFC options such as R-407A offer an effective short to medium term solution given their reduced environmental impact and relative ease to retrofit which has been repeatedly proven in use. The industry must also continue to discuss how to best monitor and control HFCs to close the net on black market suppliers – helping the authorities by reporting any instances of suspected illegally imported products is an important step in doing this.

 

 

 

Posted by Stuart Corr 16 May 2016 12:11:00 Categories: Stuart Corr's blog

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