A I R A H · L o w E m i ss i o n HV A C & R · F A C T S H E E T 1
The HFC Refrigerant Levy —
The Clean Energy Future Plan and HFCs
WHAT is the HFC Levy?
Since the 1st July 2012, as part of the Clean Energy Future Plan, synthetic greenhouse gas (SGG) refrigerants attract an
“equivalent carbon price” based on their global warming potential (GWP). SGG refrigerants will become more expensive to
replace. SGGs imported before 1st July 2012 do not attract the HFC Levy.
WHY is the HFC Levy being imposed?
Many of these SGGs are Hydrofluorocarbon (HFC) refrigerant gasses with high GWP, and the Australian Government intends that
this new levy will promote a market incentive for reducing the direct emissions of HFCs from refrigeration and air conditioning
systems by:
• Improved system design and installation standards to prevent refrigerant leakage.
• Improved maintenance and refrigerant management/handling standards to reduce emissions.
• Encouraging a move to systems that use a smaller charge of refrigerant.
• Encouraging a move to the use of lower GWP refrigerants and systems.
In addition the Clean Energy Future Plan aims to reduce the indirect greenhouse gas emissions of refrigeration systems by
encouraging improved energy efficiency and reduced electricity use through carbon pricing.
WHO will pay the Levy?
The equivalent carbon price is implemented through the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989. It is
paid quarterly as an import levy by refrigerant importers who pass the levy and associated costs down the supply chain. Ultimately
it is the end user who will pay the levy when they purchase new or replacement refrigerant. The cost impact on ‘low charge’
consumer goods such as refrigerators and car air conditioning will be low. The cost impact on residential, commercial and industrial
refrigeration and air conditioning systems can be high depending on the type of refrigerant, the mass of refrigerant employed
and any leakage. Unintended leakage rates per year (% of total mass contained) vary by sector and are typically in the range of;
refrigeration (5% to 23%), transport (15% to 40%), and air conditioning (2% to 9%).
WHICH refrigerants attract the HFC Levy?
Payment of the HFC levy is only required on SGG refrigerants listed under the Kyoto Protocol (predominately HFCs) and
imported after 1st July 2012 (in bulk or in products/equipment). The levy does not apply to natural refrigerants or other low
GWP synthetic refrigerants. The Levy is applied on top of the existing cost recovery levy, currently $0.165/kg. Common HFC
refrigerants used in refrigeration and air conditioning (and their % of the working bank) include; R134a (32%), R404A (9%),
R407C (4%) and R410A (22%).
HOW much is the HFC Levy?
The base cost of the HFC Levy is calculated by multiplying the GWP of the refrigerant (IPCC 2; 100 year values) by the Clean Energy
Future Plan carbon price of $23.00 per tonne CO2e, rising to $25.40/tonne in 2014/15. The following table lists the common HFC
refrigerants in use in Australian refrigeration and air conditioning systems, their GWP, and the estimated value of the HFC levy
through to 2015.
Refrigerant
Typical Application
GWP
AR2
(100 yr)
HFC
Levy/kg
2012/13
HFC Levy/
kg 2013/14
HFC Levy/
kg 2014/15
HFC R134a
Air conditioning, medium temp refrigeration
1,300
$29.90
$31.40
$33.02
HFC R404A
Commercial refrigeration, refrigerated transport
3,260
$74.98
$78.73
$82.80
HFC R407C
Air conditioning, medium temp refrigeration
1,526
$35.10
$36.85
$38.76
HFC R410A
Residential and commercial air conditioning
1,725
$39.68
$41.63
$43.82
Note: This table lists the new HFC levy cost at the point of importation only, not the associated costs (insurance, finance, etc.), the
cost recovery levy or the other costs associated with global refrigerant pricing. In 2015/16 the carbon price set by the Clean Energy
Future Plan will revert to a free market value and the HFC levy value will be based on the benchmark average CO2e auction price,
established in advance of the financial year.
HOW can system owners minimise their exposure to the new levy?
System owners will pay more to suppliers for HFCs as a result of the HFC Levy when they purchase HFC refrigerant for replacement
of leaked refrigerant or for new systems. Moving to low GWP alternatives for new and replacement systems and minimising leaks in
existing systems is the main way that system owners can insulate themselves from this cost increase.
Note: Replacing system refrigerant without an appropriate design/risk review by a competent person should not be attempted.
© AIRAH · Supported by the Austr alian Government Department of Sustainabilit y, Environment, Water, Popul ation and Communities · August 2012
A I R A H · L o w E m i ss i o n HV A C & R · F A C T S H E E T 1
WHAT are the options for new systems?
For new and replacement refrigeration systems, owners should consult with their service providers on options for low GWP
solutions. These include systems that use natural refrigerants which are low cost, low GWP, and offer good energy efficiency
characteristics as well as new synthetic refrigerant gases that have been designed for low GWP. The following table outlines some of
the low GWP refrigerants that are alternative options to existing HFCs and some of the issues to be considered in their application.
Refrigerant
Typical Applications
Issues for Consideration
Ammonia R717
Food preservation, industrial, some air
conditioning
Toxicity and flammability requires high construction and
handling standards (GWP 0)
CO 2 R744
Supermarket, cold storage
High pressures/high construction standards (GWP 1)
Hydrocarbons R290,
R600, R600a
Small sealed low charge systems, some
air conditioning, industrial
Flammability, charge limits, high construction and handling
standards, licensing issues (GWP up to 8)
Low GWP synthetics
Air conditioning, some refrigeration, new
synthetic refrigerants
Products and practices under development or in early deployment (e.g. HFO-1234yf (GWP 4)
Note: Refrigerants are classified according to AS/NZS1677.1. All system designs should comply with the applicable standards, i.e. AS/
NZS1677.2, the appropriate AS/NZS60335.2 product standard, and relevant industry codes of practice (under review).
High installation and maintenance standards for leak minimisation should be adopted for all new refrigeration systems especially
those designed to use existing HFCs. Providing automatic refrigerant leak detection systems and employing refrigerant pump down
and retention design strategies, in the event that a leak is detected, can also minimise catastrophic leaks.
WHAT are the best options for existing HFC systems
The first step is to work with technical service providers to put a risk management and maintenance plan in place. Have all
refrigeration systems audited to:
• Identify the refrigerant in the system and quantify the designed and current refrigerant charge.
• Check the system for leaks and potential leak sites and quantify the system leakage rate.
The next step is to fix all leaks and potential leak sites and provide incentives for maintenance contractors and service technicians to
minimise refrigerant leakage by including maximum leakage rates as a performance target or requirement within service contracts
and aim for zero leakage. If minimising leaks is not practicable it may be more cost effective to replace the system with a new low
GWP refrigerant system. Eventual replacement with low GWP systems is recommended. Correct installation and maintenance of
new systems will ensure leak minimisation.
Fact Sheet Three – Low Emission HVAC&R series; Leak prevention strategies provides additional information on this subject.
WHAT about existing HCFC systems?
Approximately 30% of refrigerant in existing systems is R22, an ozone depleting HCFC refrigerant that is being phased out.
Although R22 does not attract a HFC levy this refrigerant has limited and decreasing availability and its cost will rise significantly
as stocks run down. Equipment and components compatible with R22 are also becoming scarce. Owners should plan to change
these systems over to low GWP refrigerant systems in the short to medium term. Existing R22 gas must be recovered and recycled or
destroyed.
WHAT are the other issues that owners and operators need to consider?
Security – As HFC refrigerant value increases so does the potential for theft. Owners need to consider the security of stored
refrigerants in containers as well as access to the refrigeration systems themselves.
Safety – A risk assessment and safe work practices should be undertaken when working with any refrigerant.
Quality – Due to the possibility of contaminated, stolen or counterfeit refrigerants finding their way on to the market, refrigerant
should only be purchased from reliable licensed dealers/outlets.
Energy efficiency – Refrigerant leakage reduces system efficiency which increases running costs, i.e. a system that has leaked
refrigerant may cost more to run. Natural refrigerants provide good energy efficiency characteristics.
Fact Sheet Five – Low Emission HVAC&R series; Energy saving strategies – Existing systems provides additional material on this.
Refer to the following websites for further information
www.cleanenergyfuture.gov.au
Clean Energy Future Plan – Plan information and fact sheets
www.environment.gov.au /equivalentcarbonprice
Equivalent Carbon Price – Information, cost estimator and fact sheets
www.airah.org.au
Refrigeration and airconditioning, natural refrigerants, energy efficiency
www.arctick.org
Refrigerant handling licences and refrigerant trading authorisations
www.accc.gov.au/carbon
Monitoring product claims, representations and anti competitive behaviour
© AIRAH · Supported by the Austr alian Government Department of Sustainabilit y, Environment, Water, Popul ation and Communities · August 2012