On September 21, 2022, the Senate passed the Kigali Amendment to the 1987 Montreal Protocol (which had been signed by former President Obama in 2016) by a vote of 69 to 27, reaffirming U.S. commitment to the reduction of hydrofluorocarbons (“HFCs”) through multiple processes (some of which are already causing shifts in import and export markets, as well as in the consumer market).
The Kigali Amendment compels Montreal Protocol signatories to phase out the use of HFCs, potent greenhouse gases commonly used in air conditioning and refrigeration, by 85% over the next 15 years. Environmental groups supported the passage as an effort to reduce global warming, while some Republicans and domestic manufacturers urged passage to protect and promote domestic companies uniquely poised to manufacture HFC alternatives.
Despite these unusual alliances, coverage has been limited and many have called the move largely symbolic, in part because the U.S. is already committed to an aggressive HFC phasedown; in December 2020, Congress, via the American Innovation and Manufacturing Act (“AIM Act”), mandated that the U.S. Environmental Protection Agency (“EPA”) implement a phasedown of HFCs by issuing production and consumption allowances to importers and producers. In response, EPA passed a comprehensive rule in October 2021, which provided a detailed framework for achieving the HFC phasedown targets outlined in the AIM Act.
EPA issued its first company-specific allowance allocations under the program in October 2021 for calendar year 2022 and has since developed an interagency task force focused on illegal HFC trade, which has been very active. Still, the ratification of the Kigali Amendment underscores the Biden administration’s commitment to HFC reduction, although unintended consequences may lurk – some predict consumers will bear the cost of the HFC phasedown as supply becomes increasingly limited (there being few HFC alternatives currently available). But ratification may offer some relief to importers who have already been heavily impacted by the HFC phasedown (since a failure to ratify would have resulted in future trade restrictions).