This is the hidden connection between smuggling and climate change

Smuggling affects us all – it threatens domestic production, feeds organized crime and floods the market with hazardous products. Another little-known consequence of smuggling is on climate change, where illicit imports of products that are strictly controlled in Europe are jeopardizing our climate ambitions.

When it comes to fighting climate change, our vision for a greener future increasingly drives ambitious legislation, but at the same time the challenges of implementing these on the ground prevail. We must work together to stop smuggling by upholding the law and supporting those who are expected to enforce it.

Take the example of the 2014 EU F-Gas Regulation that bound industry to progressively reduce hydrofluorocarbons (HFCs) by nearly 80% by 2030, through a strict quota system. HFCs are gases commonly used for cooling across automotive, refrigeration and emergency sectors, among others.

While producers are committed to this phase-down, a black market for smuggled HFCs outside of the defined quota grew and these illegitimate products are now flooding the EU market.

According to the EIA, as much as 16.3 million tonnes of carbon dioxide equivalent (MtCO2e) of bulk HFCs were illegally smuggled into the market in 2018 – more than 16% over the allowable quota. That is roughly equivalent to the total annual CO2 emissions of the whole country of Slovenia or adding 3.5 million passenger cars to the EU fleet in one year. The EIA report published in April 2019 further claimed that “multiple industry sources reported that illegal refrigerants constituted 50-80% of the total market in Greece, Bulgaria and Romania.”

It is a complex problem and the evidence is hard to track. However, the industry is asking itself how illegitimate HFCs can so easily and abundantly enter the EU. And why, in this age of data connectivity and instant communication, smuggling cannot be stopped.

Clearly EU border controls are not seizing out-of-quota HFCs. Customs jobs are complex and there are much more obvious targets such as drugs, arms and exotic animals. Resources are tight and many do not know what to look for.

Moreover, complex shipping routes and reseller markets make it difficult to understand the scope of the problem and to identify which holes need to be filled. An HFC canister produced in one place may be sold through one, two or more intermediaries before it is imported across an EU border. The volume of legitimate quota-compliant products that have already entered the market is also only reported retroactively. Together, these impede efforts to track and trace products and find solutions that will stop organized crime.

As an industry, we believe we need open partnerships to help authorities and our supply chain combat smuggling. Working collaboratively through the EFCTC, a committee representing European fluorocarbons manufacturers, we are formulating strategies to tackle this complex issue. An example of this is the development of new monitoring systems that will help ensure that quotas are easier to uphold.

It’s 2020 and the public is as engaged as ever, demanding the highest levels of transparency and effective governance. We must all deliver.

Orbia’s company Koura Global is a member of the European Fluorocarbons Technical Committee (EFCTC), a sector group of CEFIC. In addition to providing resources and information about the industry, the committee works to ensure correct and effective implementation of current legislation in all EU Member States.