Control of Fluorinated Gases
The Committee consisted of the following Members:
Lloyd Owen, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 119(6):
Control of Fluorinated Gases
One means of limiting the rise in global temperature is to reduce emissions of fluorinated gases, which are being phased out under the Montreal protocol and have high global-warming potential. Hydrofluorocarbons are the most common fluorinated gas. They are mainly used in air-conditioning and commercial refrigeration systems, but they leak over time.
Regulation (EC) No. 842/2006 seeks to minimise such emissions from products and equipment, mainly through containment and recovery. In September 2011, a Commission report suggested that although it may be possible to stabilise emissions at current levels, technology offers scope for additional cost-effective reductions.
The draft regulation would impose further controls and seek better implementation and enforcement of current regulations. The draft regulation proposes a freeze in the supply of HFCs in 2015, followed by a series of reductions, commencing in 2016, to reduce supply by 2030 to 21% of the annual average between 2008 and 2011. It would be supported by bans on the use of various HFCs, on the marketing of moveable air-conditioning units containing them and on the use of fluorinated gases with high global warming potential for certain refrigeration and air-conditioning equipment. There would also be bans on the more specialist uses of other fluorinated gases, as well as a de minimis threshold for importers and producers of low volumes of HFCs.
The Government say there is no one-size-fits-all solution but that any measures introduced should result in lower overall greenhouse gas emissions. The draft regulation suggests that the pace at which the supply of HFCs would be run down respects expected market needs, but it has also drawn attention to certain areas of concern.
The European Scrutiny Committee takes the view that the proposal forms an important part of the EU’s overall commitment to reduce levels of greenhouse gases and should be drawn to the attention of the House. As the Government have drawn attention to a number of areas of concern, however, the Committee considered it would be helpful if the House were to have an opportunity at this stage to consider the draft regulation further.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon): It is a great privilege to serve under your chairmanship, Miss McIntosh. I hope my statement will clarify some of the points raised by the hon. Member for Sunderland Central, and I shall be happy to answer any further questions in the question and answer session that follows.
As hon. Members may know, fluorinated greenhouse gases, commonly known as F-gases, are wholly man-made substances. Their presence in the environment is entirely down to leaks from the equipment and applications in which the gases are produced and used. Although, in their place, F-gases are extraordinarily useful, in the atmosphere they are highly potent greenhouse gases. HFCs are the most commonly used F-gas, and they, plus many of the other F-gases, are part of a basket of gases controlled under the Kyoto protocol.
A comprehensive EU and UK regulatory regime to control emissions of F-gases has been in place since May 2006, forming part of the EU’s commitments under the Kyoto protocol. The regime’s main focus is the containment of F-gases through recovery, leak reduction and repair. That approach reflects the fact that such gases are a problem only if they are released into the atmosphere. Additionally, there are minimum training and certification requirements for companies and personnel working with equipment containing F-gases.
As part of its commitments under the current regulations, the European Commission has thoroughly reviewed the existing regulatory framework. Its conclusions were that the measures had the potential only to stabilise emissions of F-gases at today’s levels and it has therefore proposed further legislation to strengthen existing measures and to control the supply and use of F-gases in order to achieve real emissions reductions. The proposals were first published in November 2012, and we are considering them carefully and assessing their potential benefits and impacts. The current regulations have been in place since 2006 and fully operational only since 2011. A balance therefore needs to be struck between further regulation and allowing existing regulations to take effect. We also need to be mindful of the good progress being made by key sectors in the UK in reducing HFC emissions, so we must seek to avoid excessively interventionist approaches.
In the UK, we are proud of the efforts that businesses have made to implement the existing regulations. Since 2006, engineers in all five industry sectors covered by the regulations have undertaken upgraded training and certification programmes that meet the Commission’s minimum requirements. The largest F-gas using sector includes more than 27,000 refrigeration and air-conditioning engineers, who install, maintain and repair systems that contain F-gases. Many of our supermarkets are leading the way in reducing F-gas emissions through minimising leaks and introducing alternative technologies. Consequently, under the current regulations, by 2030 we are projecting reductions in UK F-gas emissions to half of what they are today. However, that falls short of the 72% to 73% reduction for non-carbon dioxide emissions required by the low-carbon economy road map.
The European Commission stated that the proposals must be efficient and proportionate. They must stimulate innovation and improve market opportunities for alternative
Businesses need certainty. They need to be confident that investment now is investment for the future, not for the short term. That is why, if we are to reach an agreement on new measures in this area, we must do so quickly and transparently.
For all the above reasons, we broadly support further action on fluorinated greenhouse gases, particularly hydrofluorocarbons, to combat rising global emissions. In principle, we support a phase-down in the use of HFCs as one of the measures, and it is a key element of the Commission’s proposals. However, much work is necessary to determine how the proposals will operate and the implications for the UK and Europe as a whole.
The Commission’s proposals contain specific elements that do not appear to support our primary objectives for further regulation of F-gases. We drew the attention of the European Scrutiny Committee to several areas of concern that we have, relating mainly to the proposed control of and bans on the use of certain F-gases in specific applications. In some cases, our concern is that the proposal could result in disproportionate costs to business. In others, we see potential for more effective measures. Those concerns are shared by many other member states.
We are at an early stage in the consideration of the proposals, but we have been working for some time to influence them and to understand their impact. We are fully engaged in discussions with the Commission and with member states and we will seek to secure an agreement that is best for the UK and the environment as a whole. We are fully engaged with business interests and others, and will continue to be as negotiations progress.
The Chair: We now have until 5.30 pm for questions to the Minister. I remind hon. Members that questions should be brief and that, subject to my discretion, Members may ask related supplementary questions.
Richard Benyon: Our preferred method of reducing greenhouse gases is to work with industry. Measures should be proportionate and effective. One of the great success stories in recent years was the Montreal protocol. There is a potential misunderstanding that the matter we are considering was affected by that protocol because it dealt with chlorofluorocarbons, but it really dealt with the depletion of the ozone layer owing to the impact of those man-made gases. The Montreal protocol was proof that by working together internationally, on a global scale, these problems can be solved. It would be good to apply that template to hydrofluorocarbons,
Gavin Shuker: The Minister refers to the Montreal protocol and rightly points out that it was agreed that by 2013, the consumption of hydrochlorofluorocarbons would be frozen and CFCs would be phased out entirely, but HFCs—the subject of this regulation—were far less tied down. As he mentioned, many developing nations have expressed concern about the cost of the transition from HFCs, so has the Minister had discussions with colleagues at the Department for International Development or the Foreign and Commonwealth Office about the implications of our decisions on HFCs? If he has not, will he consider doing so?
Richard Benyon: I am happy to convey that suggestion to my ministerial colleague, Lord de Mauley, who takes the lead on these issues. I do not know whether there have been discussions with Departments such as DFID. The hon. Gentleman rightly points out that these are not matters that can be dealt with within our own borders or, indeed, the borders of pan-national organisations such as the European Union. There has to be a global commitment, and such commitments must reflect the fact that some countries have a better capacity to deal with these problems than others. There is a clear economic advantage for countries such as Britain to develop alternatives to HFCs, as not only can they benefit our economy and manufacturing sector, but the technology can be projected around the world.
Gavin Shuker: In his answer to my first question, the Minister talked about his preferred method with regard to the red tape challenge. I understand that one of the implications of that is a one in, one out approach, with a one in, two out approach on regulation. Has the Department done any practical work to identify where regulations may be taken away if this regulation were to come in? Furthermore, what practical mechanism has the Minister already identified to ensure the careful consideration with UK stakeholders that he mentioned in his first answer?
Richard Benyon: On the red tape challenge and the one in, one out process, we are not at that stage yet. We are having a discussion with the European Commission and when we fully understand the impact of the proposals, we will determine the status of this regulatory requirement, through the Better Regulation Executive and Government processes. If it is an in, we will have to find an out. We have a transparent system for doing that and I am sure it will be shared with the House and the hon. Gentleman; that is something we can debate.
Richard Benyon: The hon. Gentleman rightly questioned whether we are engaging with industry: we are. Five sectors of the industry are affected, and it is important that at every stage the Government seek to work with them. The sectors are the stationary refrigeration and air-conditioning sector, the fire protection sector, the solvents sector, mobile air-conditioning manufacturers and assemblers and high-voltage switch manufacturers. It is a highly technical area that I am rapidly having to get to understand. I assure the hon. Gentleman that we are working closely with those sectors, and, in turn, a lot of them have organisations working at European level. Between us and them, and our discussions with the European Union, I hope we will get something that is not only effective but proportionate.
Gavin Shuker: To ask a question on specifics, has the Minister identified where the burden of regulation will fall heaviest on UK manufacturers? I know that there are potentially significant costs to some end-users, and he referred to some sectors that are affected. Can he give a practical example of an organisation that would be particularly affected? I suppose one area might be people who work in refrigeration engineering. Does he have an example of a business that would be disproportionately affected?
Richard Benyon: We have some concern about a requirement to import only equipment that is pre-charged with F-gases. Not only would that provide a difficult burden; it would be an incentive to develop different areas of the economy. If air-conditioning or refrigeration equipment could be installed and then charged, it would be not only safer but cheaper.
We are currently examining the Commission’s impact assessment and are undertaking our own analysis of the potential impacts for the UK. The Department for Environment, Food and Rural Affairs has drawn the Commission’s attention to a number of weaknesses in the impact assessment, and in particular, to some issues that are not considered. The European Commission has acknowledged that further analysis of the impacts is needed in some areas of their proposals, and is undertaking some of that analysis.
Gavin Shuker: The model that the Minister was just referring to has been subject to questions, because assumptions are made about replacing HFCs with other refrigerants, rather than replacing the current HFCs, which are in the model, with those of low global warming potential. What work is being done by officials in the Minister’s Department to ensure that that model, in which a high GWP gas is replaced with a lower GWP gas, is also considered? It might be at less cost, but it is certainly not considered in the model as it stands.
Richard Benyon: The hon. Gentleman’s point is entirely consistent with our wish to develop new versions of what are loosely referred to as green technologies. We think there is a real win for UK manufacturing and business if we can get regulation that, first of all, provides the industry with what it needs most, which is clarity. That can be the greatest deregulating factor, regardless of any niches Governments create; if they can make sure they give businesses the clarity they need, that is a major win.
Secondly, regulation should lead to the development of alternatives. There is now a system of assessing the global warming potential of different gases using carbon dioxide as a factor of one and applying a value against that to all other gases. Once we understand the impact of all the different gases, and we already have a highly regulated structure that allows that assessment to be carried out, we can make sure not only that we have a simplified regulatory system but that the equipment those industries provide will be safer for the long term.
The real problem with CFCs and HFCs is that, at some point, they find their way almost in their entirety into the atmosphere, because when equipment becomes redundant or is damaged in any way, the gases leak. The gases are totally man-made. We therefore have to ensure that we have a proportionate regulatory system that ensures that as few gases find their way into the environment as possible.
Gavin Shuker: Finally, could the Minister flesh out his earlier comments about the implications of the existing regulations? One of the examples he gave was about concern that pre-packaged or pre-charged refrigeration units would be installed by the home owner or the business owner, rather than by a regulated or trained refrigeration engineer, who would have a much deeper burden of regulatory responsibility on their shoulders. As part of the process of deciding where to go with these regulations at European level, will he give me an undertaking that he will look at that issue, to try to ensure that there is a level playing field for people on whom the burden of regulation currently falls, so that new entrants are not just taking pre-packaged or pre-charged installations into their own hands to get around the regulations?
Richard Benyon: I entirely accept the hon. Gentleman’s premise, which is that we want a level playing field. Over the years, we have put considerable resources into ensuring that training accompanies certification. There is a proposal that certificates will be valid for a maximum of five years. In the current framework, certification bodies have the option of applying an expiry date, but it is not mandatory. It is unclear what the change will mean for the people he refers to and the certificates they are awarded. We want to ensure that the provisions brought in by the Commission recognise that.
We asked whether other changes will be made to existing training and certification requirements. The answer is that it is uncertain what additional changes the Commission may seek to introduce, because such a wide scope has come out of the conversations we have had thus far. I hope that we will be better informed about that in the future and I am happy to keep the hon. Gentleman informed.
We are talking about the phase-down of F-gases. The phase-down mechanism will not affect substances that have already been placed on the market, or prevent the ongoing use of HFC-based equipment that existed before the new regulation comes into force. For importers and producers of low volumes of HFC, a de minimis threshold will apply. I hope that will mean that we are being proportionate. We will address the concern that the hon. Gentleman rightly has about some people being able to get round the regulations in some way.
Chris Heaton-Harris (Daventry) (Con): Will the Minister comment on the European Commission’s impact assessment? It is an area where the Commission has been lacking in the past. I remember the registration, evaluation and authorisation of chemicals—REACH—impact assessment being unbelievably poor, considering the massive re-evaluation that was required for chemicals at that time. Bearing in mind the previous question from the hon. Member for Luton South about how the measure will impact on small businesses, I wonder whether that area was lacking in the impact assessment and its implementation.
Richard Benyon: My hon. Friend is right to point out failings in impact assessments in the past, and I can certainly vouch for representations made to me at the time about the impact that the REACH impact assessments would have on UK business. I hope I can reassure him that we are assessing the Commission’s impact assessment rigorously and that we are seeking to ensure that when we transpose it into an assessment of UK conditions, we do so on a realistic basis. This is a highly technical matter, but it is important that we get it right.
It is right that we limit these gases because of their effects, but we have to do so in a way that respects individual users. F-gases are used in inhalers, and we want to make sure that we do not affect their important value for sufferers from asthma and other respiratory diseases, just as we do not want to affect them at macro level, because F-gases are used in large refrigeration and air conditioning units. We want regulation to work better for British industry, and to promote the potential for more green technologies in our manufacturing sector.
Barry Gardiner: The EU said that there is a €50 per tonne marginal abatement rate on the 2030 pathway for these gases. That seems relatively high in comparison with other possible abatements and offsets, and would have led me to a further question about what offsetting arrangements the Minister has considered in relation to F-gases.
Richard Benyon: I know where the hon. Gentleman is coming from. It is too soon in the process of negotiation with the European Union to make a full assessment of the measure he describes. I assure him that we will be working extremely closely on the impact assessment. With regard to the phase-down of HFCs, our initial analysis suggests that while the early step-down stages are quite steep, the later ones are less demanding, and the reduction steps within the proposed phase-down mechanism are achievable. However, it will be dependent on the development and introduction of alternative technologies and replacements for HFCs.
2, in terms of their global warming effect. We know that they comprise 2% of the GHGs in the atmosphere, but how much more damaging are they than normal CO
2as a factor of one, HFCs were many thousands of times more damaging, although I cannot remember the exact figure, but I hope for clarity and inspiration very soon. [ Interruption. ] It has come to me all of a sudden; it is amazing how these things work. It is 12,000 to 23,000 times more damaging.
Richard Drax (South Dorset) (Con): I congratulate the Minister on his knowledge of this interesting and complicated subject. He talked about industry and clarity. There is some concern in industry that there is lack of clarity, and that the phase-down proposal is too fast and does not provide sufficient scope for industry to adapt and develop new products. Would the Minister comment?
Richard Benyon: That is precisely the area where we are having discussions with the Commission. As I said earlier, if we get this right, we will create jobs and opportunities because we can develop new technologies very quickly in this country. I assure my hon. Friend that we are consulting with industry at every stage. We want to make sure that the Commission’s impact assessment reflects the reality while sticking to our determination to phase out greenhouse gases. However, I want to make it clear that we will do everything that is proportionate—I keep using that word. At this stage, that is about all I can say to my hon. Friend. I can only give him reassurance that we are working extremely hard to get the balance right between dealing with a very dangerous greenhouse gas and making sure that that is proportionate to the needs of industry, and promoting potential new technologies.
Richard Drax: I thank the Minister for that reassurance. My last question is on the medical side. I understand that HFCs are used in metered-dose inhalers. Exempting the supply of HFCs for use in medical experiments would give some clarification to that industry. Can the Minister say anything on that vital use of HFCs?
Richard Benyon: My hon. Friend is absolutely right to raise the case of metered-dose asthma inhalers. That is a very important use of the product. Let me give the background. The Commission proposes a freeze in the supply of bulk HFCs placed on the market in 2015, followed by a series of reduction steps from 2016, and by 2030, EU HFC supplies would be 21% of the annual average between 2008 and 2011. That gives a measure of what we are trying to achieve. Phasing down to 21% of current availability allows for the continued use of HFCs for important products, such as the one that my hon. Friend describes. A derogation for metered-dose inhalers is possible, but we believe a phase-down will allow sufficient HFCs for their use.
2in the atmosphere. That presents me with a mathematical challenge, which I wonder whether he could clarify. The EU proposal states that, in total, F-gases account for 2% of all greenhouse gases in the EU today. If they are 2% but they have 23,000 times the effect of the equivalent of CO
2, that must amount to more than 100% of the activity from greenhouse gases, so I am at a loss to understand how they can be so potent and account for 2% by volume of the gas in the EU without coming to a rather dramatic conclusion about the damaging effect they are having on global warming.
Richard Benyon: I respect the hon. Gentleman’s great knowledge of and interest in these matters. To be frank, I think I will have to write to him on this, because it is an area that requires much clarification, although strange things are entering my mind as I stand here. The range of global warming potential is from one to 23,000. I think I may have put a comma in the wrong place. The average of probability is two to 3,000. I will have to write to the hon. Gentleman, because we could detain the Committee for a long time while I try to work out where decimal points are and commas are not, but I understand his point, and it is important that we clarify it for the future debate that we will have on this subject.
As I said, we are in the negotiation phase with the Commission. If I was presenting to the House a fait accompli, including the impact it would have on UK business, on providers of the equipment and on our ability, as a Government, to regulate our own industry, it would be vital to have the point nailed down in detail, but at this stage I hope that the hon. Gentleman will understand that we are working very closely with the Commission to try to get it right.
Chris Heaton-Harris: A number of us received a briefing from a company in Runcorn that employs 20 people. It uses significant quantities of trifluoromethane, which is produced as a by-product of HFC-22. As the Commission’s proposal stands, the level of HFC-23 by-products must be reduced to zero. Essentially, that is impossible, which will cause issues for around 20 jobs in Runcorn. I assume the Minister is taking soundings so that he can raise the issues in negotiations. It is not just this company that is affected; a number of German companies have similar issues. I assume, therefore, that pressure is building to make sure such issues are taken into account in negotiations.
Richard Benyon: I am certainly not going to stand here and try to claim that the measure will have no impact. In every regulatory measure, there will be changes that have an impact on some areas of business. However, we are speaking to the Commission about this point, and we believe that it is not the Commission’s intention on this area of F-gas production. That is as much assurance as I can give at this stage. I hope the company concerned will continue to work with my Department and make the point clear. That is really important, given the value of the gas for the products it is used in, as well as the impact such discussions will have on the Government’s intentions in relation to F-gases.
That the Committee takes note of European Union Document No. 15984/12, and Addenda 1 and 2, relating to a draft Regulation of the European Parliament and of the Council on fluorinated greenhouse gases; and supports the Government’s view that changes to some aspects of the Commission’s regulatory proposal are required to deliver the legislative basis necessary to support and encourage the use of lower global warming potential refrigerants whilst offering a pragmatic solution that is not technology prescriptive, does not hinder innovation to lower greenhouse gas emissions over the different fields of applications and does not prohibit the use of equipment that has not reached the end of its economic life.—(Richard Benyon.)
The Opposition agree with the Government that given the range of gases, equipment and applications, there is no one-size-fits-all—no silver-bullet—approach to regulation, but that should not be used as an excuse to fail. As we know, these gases can be up to 23,000 times more damaging to our warming climate than the most focused-on gas—carbon dioxide. Any framework for reducing the use of these gases should rightly be determined, shaped by the comments of the Committee, across the European Union. Climate change requires transnational co-operation. Given that these measures could impact on businesses in the UK, we should not put our industry at a disadvantage, compared with the industries of our nearest neighbours.
On the proposed regulation, we are satisfied that the reductions in the use of these gases are manageable, despite the initial, relatively steep step-downs. It will be vital, however, to work with the affected industries, and with companies that feel a particular impact, through a proper programme of communication, to help them to understand the implications before we get to the introduction of the first step-down and as the step-downs continue.
It will also be vital for the Government to help to identify alternatives to the current technologies. In many cases, it will be relatively simple to substitute one coolant for another, but in others, much more work will have to be done. Again, working across the European Union will help.
I hope the Minister will work with his officials and with the business community in the UK to help shape the proposals in our national interest. This is a powerful reminder that work across member states can help to tackle the biggest threats to our environment, and the Government cannot simply stick their head in the sand when it comes to European co-operation. I trust the Minister will take note of the Committee’s concerns about the proposed and existing regulation as the process continues.
Richard Benyon: In case I got the Committee numerically confused in some of my earlier comments, the global warming potential of these gases is between 12 times more and 23,000 times more than that of other gases, so I think it was correct to say that it is 23,000 times more.
As I intimated in my opening remarks, the proposal for further regulation of F-gases comes against a background of wider efforts to reduce the quantities of gases with global warming potential that we release into the atmosphere. Set against our emissions of carbon dioxide, the emissions of F-gases are small, but nevertheless they are part of the problem that we must tackle if we are to reduce the risk of dangerous changes to our climate.
The Government believe that we have made good progress, but there are further opportunities for business to play its part. We want to encourage and support moves towards more climate-friendly alternatives to high global warming potential F-gases. That must be where technically and economically feasible alternatives are available and where their use would result in lower overall greenhouse gas emissions.
I hope that I have answered the questions that were raised. I have tried to be helpful and reassure hon. Members that the Government are seeking to get this