EU quota row risks blocking HCFC market

Italian refusal to change reference year of new ozone-depleter law threatens 2001 quota allocation

The EU market in hydrochlorofluorocarbons (HCFCs) is facing disruption from the start of next year because Italy is opposing a plan accepted by all other EU governments to change individual company production and import quotas. The ozone-depleting chemicals are used as refrigerants and in foams and are due to be phased out in the EU by 2015 under a new regulation (ENDS Daily 20 June).

Which firms will be allowed to import or produce HCFCs in 2001 is in dispute because Italy is holding out against a European Commission proposal to alter the regulation's reference year for quota calculations. The issue was overlooked when the EU regulation was negotiated; the Commission now wants to change the reference year from 1996 to 1999, the latest for which figures are available.

It says the market has undergone enormous changes over this period, and a failure to adjust the date would prevent over 25 firms that currently import HCFCs from obtaining a quota next year. This would "severely affect" their businesses, an official said. The proposal was based on the "minimum market interference" principle and sought to avoid possible legal actions, he added. In addition, it would not affect next year's global cap on HCFC volumes allowed on the EU market. This is set to fall progressively to 2015 and next year will be 25% lower than in 2000.

Italy's reasons for opposing the new reference year are obscure and no officials have been available this week to explain its position. One EU diplomat said it was still not clear whether the stand was a question of principle "or whether it's about certain companies losing out." An industry source speculated today that the 1996 date might particularly favour Italian firms.

The dispute must be settled "within days," the Commission official said, since the regulation comes into force on the first of October and the 2001 quotas need to be agreed soon. Another EU source expressed frustration that such a minor issue could cause so much disruption: "I don't know why we're arguing about it. The change [in the quotas] will be so small they won't notice it."

Follow Up:
European Commission, tel: +32 2 299 1111.

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