Further action against businesses that fail to buy quota for importing HFCs

The Environment Agency has started issuing more penalties against businesses that have failed to buy quota under the F-gas regime.

The Fluorinated Greenhouse Gases Regulations apply to anyone who produces, imports, exports or sells F-gas or equipment containing F-gas. Hydrofluorocarbons (HFCs), for example, are commonly used in refrigeration, air-conditioning and heat pump equipment.

In this article, we outline when businesses must apply for quota and the penalties if businesses don't comply.

When must businesses apply for quota?

You must apply for quota to produce F-gas or import it to Great Britain each year if you want to:

• Use it yourself to produce or import HFCs.
• Authorise an equipment manufacturer or importer to use your quota.
• Transfer your quota to another F-gas producer or importer.
• Import bulk HFCs to Great Britain to pre-charge equipment for export (you will need the necessary EU quota authorisations for export to the EU). If you do not get enough quota your consignment will be held at customs until the National Clearance Hub and the Environment Agency have checked to ensure that goods are legal.

To buy quota, you must register with the EA for a F-gas account. Quota can only be brought during the annual quota application window, which is between 30 June and 31 August.

What are the penalties if businesses don't comply? 

It’s against the law to place HFCs on the market in Great Britain if you do not have enough quota. You could receive:

• A large civil penalty - these have ranged from £20,00 to £200,000 for a single breach.  
• A quota penalty - the Environment Agency will take off 200% of the amount you imported above your quota allocation from your next quota allocation. For example, if you imported gas equivalent to 100 tonnes of CO2 more than your quota, the Environment Agency will take off 200 tonnes from your quota for the following year.

The regulations also apply to anyone who uses or services equipment that contains HFCs, perfluorocarbons and sulphur hexafluoride. Recently, a business was issued with a penalty of £75,000 for failing to have a leak detection system in operation and another was penalised £10,500 for failing to keep records of fluorinated gas.

If you receive notification from the Environment Agency that you’re not complying with your F-gas obligations, you should act quickly and obtain specialist legal advice. 

How can Ashfords help?

Paul Collins is an environmental lawyer. He worked for the Environment Agency for over a decade until 2024, acting as the lead lawyer for the Environment Agency enforcing the climate change regimes. He represented the Environment Agency in more than 150 appeals against civil penalties, in the First-tier Tribunal and the Upper Tribunal. Therefore he's uniquely well placed to advise clients in relation to regime compliance, steps to take in response to enforcement action, and prospects of success when making representations/bringing appeals. 

For further information or advice, please contact our business risk and regulation team.