HFC tax returns to French 2019 Finance Bill

In the latest twist in the French HFC tax saga, French MP Joël Giraud tabled a revised text of the proposed tax, which on 12 November was adopted by the French Parliament and has now been officially published in the 2019 Finance Bill.

MP Joël Giraud is a rapporteur on the budget, and coordinates with the various parliamentary committees to adopt budget bills. He is from the French President’s political party La République En Marche.

The new text reintroduces the tax, which will enter into force in 2021 only if the industry doesn’t meet its voluntary commitments to further reduce its HFC consumption.

“The implementation of a tax on hydrofluorocarbons (HFCs) in 2021, if industry does not respect by then its voluntary commitments, is a real breakthrough on a key theme,” said MP Matthieu Orphelin, one of the early and strongest advocates of the HFC tax in the French Parliament, from the governing LREM party.

“It responds to the commitment of the government taken in the July 2017 Climate Plan to limit the use of HFCs, which are powerful greenhouse gases with a global warming potential more than 15,000 times greater than carbon dioxide (CO2) – and are at the origin of just over 5% of France's greenhouse gas emissions," Orphelin said.

New tax rates

This is a significant reduction compared to an earlier draft, which set the tax at 15 euros per ton of CO₂ equivalent (€/tCO₂e) in 2021, €22/tCO₂e in 2022, €30t CO₂e in 2023 and €45/tCO₂e in 2024.

However, the adopted tax doesn’t enforce any support mechanisms to support the uptake of alternative refrigerant-based equipment – such as natural refrigerants.

The French tax would follow the Spanish model, where an HFC tax has been in force since 2013 with no direct support mechanisms for the transition to ultra-low global warming potential (GWP) refrigerants.

Spanish unions and trade associations point out that the tax with no support mechanism is not effective enough to accelerate the ecological transition towards HFC-free HVAC&R equipment.

A lack of incentives to adopt alternative refrigerants can also encourage illegal trade in HFCs with neighbouring countries, as there is no support to mitigate the capital investment required to change equipment and re-design the French HVAC&R industry's business model.