Report from the Commission assessing the quota allocation method in accordance with Regulation (EU) No 517/2014

Regulation (EU) No 517/2014 (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. It also stimulates innovation and facilitates convergence towards a global agreement to phase down hydrofluorocarbons (HFCs) under the Montreal Protocol.

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"). This is a legally binding agreement which will help all countries achieve their commitments under the Paris Agreement. Developing countries can obtain support through the Multilateral Fund for the Implementation of the Montreal Protocol, 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.

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. 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 Forum established pursuant to Article 23 of the F-Gas Regulation.