Why the 2027 quota cut moves value to recovered refrigerant

I have traded HFC quota for seven years across the EU, Great Britain and the United States. In relative terms, the 2027 step is the largest since I started in this market, and it changes who holds value at the end of the chain.

How big is the 2027 step?

Annex VII of Regulation (EU) 2024/573 sets the maximum quantity of HFCs that may be placed on the EU market each year, in tonnes of CO2 equivalent:

• •2025 to 2026: 42,874,410 tonnes a year;
• •2027 to 2029: 21,665,691 tonnes a year;
• •2030 to 2032: 9,132,097 tonnes a year;
• •from 2050: zero.

From 2026 to 2027 the room almost halves. Against the 2015 baseline (176.7 million tonnes of CO2 equivalent), about 12 percent is left in 2027. The next step comes in 2030, to just over 5 percent. After that it falls in smaller steps to zero in 2050. In June 2026 the Commission set the reference values used to divide the 2027 to 2029 quota between producers and importers (Implementing Decision (EU) 2026/1382).

Why does demand not fall with it?

Because demand comes from equipment that is already installed. Every cold room, chiller and heat pump installed over the past twenty years needs servicing, and much of it runs on refrigerants the quota is now pricing out. Equipment does get replaced, but at the pace of depreciation and capital budgets, not at the pace of a legal table.

The result is a widening gap between the refrigerant the market needs and the new refrigerant it is allowed to buy. Each step in the table widens it further.

Why is recovered refrigerant outside the quota?

The quota applies to HFCs that producers and importers place on the EU market. HFCs recovered in the EU and then recycled or reclaimed do not count. For anyone looking at the end of the chain, that is the most important rule in the whole system. A kilogram recovered from a decommissioned system and reclaimed to specification can go back to market without using quota.

One caveat: recycled or reclaimed refrigerant imported from outside the EU does fall under the quota. The exemption applies to gas recovered here.

So recovered refrigerant changes category. It used to be mainly a disposal cost. It also becomes a source of supply.

Does this apply to every refrigerant?

Not to the same degree. For R404A and R507A, virgin gas has been banned for servicing refrigeration equipment since 2025. There, reclaimed gas does not compete with quota: until 1 January 2030 it is the only legal supply for servicing.

For R134a, R410A, R407C and replacements such as R448A and R449A, it is different. There, reclaimed gas competes directly with new gas that requires quota. The scarcer the quota, the stronger that position.

What this does not mean

It does not mean reclaimed refrigerant solves the shortage. There are three reasons:

• •Little gets recovered. A lot of refrigerant is lost through leaks or careless decommissioning and never reaches a processor.
• •Collection is fragmented. The gas sits in small lots spread across contractors, wholesalers and equipment owners.
• •Servicing bans limit the runway. For high-GWP refrigerants the window closes in 2030 or 2032. Not every reclaimed refrigerant has a long future.

The opportunity is real, but it sits in logistics and trust, not in the chemistry. My view: over the next decade the hard part is not reclaiming refrigerant. It is getting enough recovered refrigerant to the plants.