1.7 HFC Taxes and Incentives

Another key policy influencer on natural refrigerants adoption is a tax on HFCs, which has been adopted in a number of European countries, including Denmark, Norway, Slovenia and Spain, and most recently in France.

The French tax, which was delayed from 2021 to January 1, 2023, targets all virgin (not recycled) HFCs and HFC/HFO blends. Applicable to producers and importers, the tax is set at €15 (US$15)/tCO2e in 2023, rising to €30 (US$30)/tCO2e in 2027. But, according to the adopted amended version, the tax will not take effect if the amount of HFCs placed on the market for the year 2022 is less than 10,170 Kt CO2 equivalent.

France also adopted a plan to financially support HFC alternatives from January 1, 2019, until December 31, 2022, via an income tax discount. Companies can deduct from their taxable profit an amount equal to 40% of the original value of all new HFC-free refrigeration and air-conditioning equipment, including that based on natural refrigerants.

Since 2000, Denmark’s imports and use of HFCs have decreased much faster than in the rest of the EU.14 This development is thought to be mostly due to an HFC tax adopted in 2001. The original HFCs tax in Denmark, DKK 150 (€20/US$22.3) per metric ton CO2e, was increased by DKK 30 (€4/US$4) in July 2021.

In Norway many HFCs (imported or produced domestically) are taxed at the rate of €0.06 (US$0.06)/kg of CO2e.21 The tax applies to pure gases in bulk or contained in pre-charged appliances; it is not applied on recycled HFCs. Germany, through its Federal Ministry of Economics and Climate Protection, has been promoting incentives for refrigeration and air-conditioning systems since 2008 as part of the National Climate Protection Initiative (NKI). Its most recent program, which began in Dec 2020 and runs through December 31, 2023, offers grants to commercial users of non-halogenated refrigerants in new stationary refrigeration and air-conditioning systems (including components and storage) and heat pumps as well as new vehicle air-conditioning systems in buses and trains.22

The grant is available to companies, non-profit organizations, municipalities, local authorities, special-purpose associations and private companies, schools, hospitals and church institutions.

Refrigeration systems in the low-capacity range (starting at 1kW/0.28TR) are included in the subsidy, as are systems in the higher performance range, which were previously excluded.

HFC taxes can be seen as a driver for natural refri- gerant growth, since natural refrigerant solutions are not taxed. The taxes, in effect, level the playing field, helping to make first costs of HFC and natural refrigerant systems more comparable. Incentives can be a great promoter of natural refrigerant systems, as seen in Japan.