Allocation Plan of HFC Refrigerant Production Quota for Year 2024

China Decides HFC Refrigerant Quota for year 2024

Abstract:  According to the notice issued by the Ministry of Ecology and Environmental Protection on November 6 on the "2024 Total Hydrofluorocarbon Quota Setting and Allocation Plan", the baseline value of the production and use of HFCs (third-generation refrigerant hydrochlorofluorocarbons) in China is measured in tons of carbon dioxide equivalent (tCO2), which is the average production and average use of HFCs in China in the baseline year (2020-2022), plus 65% of the baseline value of the production and use of hydrochlorofluorocarbons (HCFCs). Accordingly, the baseline value of HFCs production in China is 1.853 billion tCO2, and the baseline value of HFCs use is 905 million tCO2 (including the import baseline value of 005 million tCO2).

According to the national HFCs production baseline value in 2024, the total production quota of HFCs in 2024 is set to be 1.853 billion tCO2, the total import quota is 100 million tCO2, and the total domestic production quota is 895 million tCO2.

The portion of the total quota allocated this time is the average production and average use of HFCs in the baseline year, the total import allowance, and the production and use of HFC-23 based on actual demand. For the part of the total quota that has not yet been allocated, the Ministry of Ecology and Environment will consult with relevant departments in a timely manner during 2024 to study the allocation method according to the progress of the implementation of the quota and the needs of relevant industries, including to increase the amount of quotas issued and the use of HFCs in key industries such as semiconductors.

At the same time, HFCs production units may apply to the Ministry of Ecology and Environment for adjustment of HFCs production quotas and domestic production quotas in accordance with the relevant requirements of the Regulations on the Administration of Ozone Depleting Substances.

The principles of adjustment include: the quota of HFCs of the same variety can be adjusted in equal amounts between production units; HFCs production facilities with controlled use that are put into operation after December 31, 2022 are allowed to obtain quotas through quota adjustments. Quota adjustments for different types of HFCs must be followed: they can only be adjusted when applying for quotas for 2024; Adjustments must not increase total carbon dioxide equivalent; The quota adjustment increment of any variety of HFCs shall not exceed 10% of the quota of the variety approved by the production unit according to the allocation method of this program; HFC-23 is not involved in modulation.

For fluorine chemical companies, the allocation of HFCs is crucial. In order to compete for more quotas, domestic fluorine chemical companies will compete for production and sales almost regardless of cost in the baseline year (2020-2022). Therefore, "a loss of one ton of production, a loss of three years" has become a true portrayal of the industry.

Since the second half of 2023, as the third-generation refrigerant distribution plan has entered the countdown, the fluorine chemical industry chain has received widespread attention from the capital market, and some brokerages even believe that "fluorine chemical industry is expected to usher in an inflection point in the industry" and "golden decade".