

                                                June 27, 2013
Luke Hall-Jordan
Stratospheric Protection Division
U.S. Environmental Protection Agency
1200 Pennsylvania Ave, NW (6205J)
Washington, DC  20460


Dear Luke,

At the industry stakeholder meeting with the Alliance for Responsible Atmospheric Policy member companies on May 14, 2013 the EPA solicited input as it drafts a proposed rule for the allocation of HCFC allowances for 2015-2019.  Airgas, Inc. appreciates the opportunity to provide its comments from the perspective of a refrigerant distributor and reclaimer.

HCFC-22 reclamation has been hovering at about 20% +-2-3% of estimated industry reclamation capacity for the past 5+ years, despite EPA's stated objective to increase reclaimed product substantially.  The data from 2005 - 2011 show that the EPA has consistently issued more HCFC-22 Allowances than actual consumption indicating a consistent overestimation of actual demand as well as the amount of product being reclaimed for resale.  By adding Recoupment Allowances of 2,984 MT in each of 2013 and 2014 without a commensurate offset to the base consumption allowances, this additional HCFC-22 volume will, in effect, reduce the volume amounts which the EPA assumed would be supplied from reclaimed product and/or inventory drawdown, so long as the estimated service demand is indeed correct.  This compounds the problem of the EPA's historical overestimation of demand and failure to incent an increase in reclaimed volumes. 

To remedy the above problems, Airgas suggests it would be best to issue allowances for HCFC-22 for 2015 to 2019 on an accelerated reduction (larger percentage decreases in early years, slower in later years, i.e. 30%, 25%, 20%, 15%, 10% of the total reduction) towards the complete phase-out of allowances of HCFC-22 in 2020.  

This accelerated reduction would counter the historical overestimation of service demand and promote the increased amount of HCFC-22 being recovered and returned for reclamation.  This would provide a continual decline in availability of virgin material toward the elimination in 2020 versus a sharp drop-off, enhancing planning ability, promoting relative stability and reducing uncertainty in the market, forcing continued market conversion, and giving the volumes of reclaimed material a chance to reach its full potential in the U.S. 

Any concerns over being overly aggressive with reductions of available consumption allowances in any given year are unwarranted.  There is little risk because of the untapped safety valves of reclaimed product and inventory drawdown.  There are arguably large volumes of HCFC-22 currently sitting in inventory - some estimates place this at 45,000 to 90,000 MT - and there will certainly be a considerable build in inventories in 2013 and 2014 especially due to the nearly 3,000 MT of additional recoupment allowances awarded each year over and above what EPA originally deemed sufficient.  Also, an abundance of available virgin material each year has historically been the reason that reclaimed volumes have not significantly increased and remain at only a fraction of the reclamation industry's total capacity.  More importantly, a shortage, or perceived future shortage, of available virgin material is exactly the incentive needed to induce higher volumes of HCFC-22 recovery and reclamation.  Free market dynamics will determine the pricing of HCFC-22 which in turn drives conversion and quantities of HCFC-22 being recovered/reclaimed.

Again, thank you for providing an opportunity for stakeholder input as the EPA reviews its Vintaging Model and prepares a Proposed Rule for HCFC Allowances for 2015-2019.  I would be pleased to discuss our comments further and answer any questions you may have.  Please do not hesitate to contact me. 




Sincerely,


John M. Batt
Director of Product Stewardship & Regulatory Advocacy
