The Growing Problem of Illegal Refrigerants

The phase down and phase out of HFC refrigerants across the European Union was done to help the environment. These commonly used HFC refrigerants have an extremely high Global Warming Potential (GWP) and are now being replaced with lower GWP alternatives such as HFO’s like 1234yf and by natural refrigerants such as R-744. In order to ensure countries and companies complied with the phase down strict regulations and rules were set in place. Production was capped. Imports were capped. Companies and contractors were incentivized to use more climate friendly refrigerants.

While all of this had the positive effects of reducing Global Warming it came with unintended consequences. All of these new regulations and production limits caused the supply of HFC refrigerant to dwindle across the European Union. And just like anything else in the world, when the supply shrinks and the demand is still there then the price rises. That is exactly what happened in Europe. Last year certain refrigerants saw multiple hundred percent increases in price. The most prominent example is R-404A. Imagine paying five-hundred percent more for R-404A. What would you do? How would your customers react?

Some people saw these high prices and shortages of HFCs as just a growing pain. After all, this was only temporary. The new refrigerants would began to take over and dominate the market in a few years time. They just had to get through this transition and then they would be fine. Others however, saw a different approach. They saw profit. They saw dollar signs dancing in front of them as the prices of these HFC refrigerants kept rising and rising.

Over the past few years there has been an explosion of refrigerant crime across the European Countries. From what I have read there are three main types of crime being perpetrated on refrigerants.

Theft

It was reported this week that thieves targeted a German refrigerant manufacturer of R-134a. This wasn’t a small operation stealing a few cylinders here and there. No, these guys stole one-thousand cylinders of R-134a worth an estimated value of nearly seven-hundred thousand dollars. This was a well organized operation that had the time and effort to arrange the stealing, loading, and shipping of one-thousand cylinders of refrigerant. Let’s think about that for a moment. Most refrigerant cylinders come forty to a pallet. So, that is twenty-five pallets of refrigerant stolen. Typically, you can fit twenty pallets on to a truck. These guys were so greedy that they somehow crammed an additional five pallets in there.

This isn’t the only report of R-134a being stolen either folks. In July other refrigerant manufacturers were hit across Germany. In one example over eight-hundred cylinders were stolen. In other cases there have been multiple cylinders stolen. Five cylinders here, sixteen here, ten there. A lot of the refrigerant manufacturers in Germany are hit over and over again. Refrigerant is now seen as a commodity in Europe. The reason for all this is what we mentioned above, price. The price on R-134a has increased over eight times what it was in Europe last year. Again, let’s do some math. Let’s call R-134a price today at ninety dollars a cylinder. Now, times that number by eight. Seven-hundred and twenty dollars a cylinder. That is just unbelievable.

These huge price increases are directly due to the MAC Directive that organized the phase down of R-134a and replaced it with 1234yf or R-744. The bad news is that there are still so many cars on the road today that take R-134a and they aren’t going away anytime soon. The need for R-134a will be with us for at least another ten years. If the price continues to remain high then we are going to continue seeing these robberies occur. The good news is that here in America we haven’t had such a significant shortage and at this time R-134a does not have a set phase out date. While there are cars today taking 1234yf it is not a mandatory switch at this point. We still have time, and to be honest, I don’t see it getting to this level over here.

Online Selling

Now, most of the time, when people commit crimes they don’t think it through all the way. It’s the same way with these refrigerant thieves. While many of them try to unload their cheap product onto an unwitting buyer, others take a different route. They opt for putting their stolen merchandise online for all of the world to see. Yes, that’s right. A lot of these guys put their products on sites like E-Bay and Craigslist.

There was an example the other day in Italy where an auto parts retailer was raided by the Italian Police due to them selling R-134a without the proper documentation and certification. He was just selling the cylinders on E-bay for a quick buck. Who knows if the product was stolen or not. Regardless, he broke the law by not obtaining the proper documentation when selling to his customers. Europe is not kidding around with these kind of sales.

This isn’t just isolated to out friends across the sea. The same problem exists here in America. You can go to Ebay.com today and search for R-22 cylinders. You’ll find tons of matches and I’m willing to bet that not all of them are going to ask you for your 608 certification number. Again, highly illegal. I will say that after looking into a few of the top sellers of R-22 on Ebay there is a mention of providing a your 608 EPA cert number, or also giving you the option to fill out an intent to resale form. Doing it this way is perfectly legal, but as I said I KNOW there are some out there selling R-22, or even R-134a/R-410A without asking for a EPA license. You might have to dig a bit more, but they will be there. Heck, they may even have the cheapest price.

While E-bay is a big problem it is not the worst offender. No, that prize goes to Craigslist. Craigslist may not have the volume that Ebay has but it comes with a whole host of other problems. With Ebay you provide the money to the seller through the Ebay platform. There is a paper trail. You can trace back who you bought from and they can trace back who they sold to. If someone gets audited there is at least that trail that can be relied upon. Craigslist has none of that. Most of the Craigslist sales are done in person and in cash. There is very little to trace back, if anything. Most of the time it’s just a simple swap in a parking lot and then it’s over. I’m willing to bet that sellers aren’t stopping the sale if the buyer doesn’t have the proper certification.

While we haven’t had much of a problem of illegal online sales here in America I fear that it has increased this year. This is mainly in part due to the new EPA refrigerant purchase restrictions on popular HFC refrigerants such as R-134a, R-404A, and R-410A. People who were able to purchase cylinders of HFC refrigerants less then twelve months ago now find that they have to be certified. I can still find numerous sellers on Amazon.com selling HFCs without licensing required. In one example of 410A I see no mention anywhere of providing a 608 license certification number. This is now illegal. While many people may not know this, ignorance will not save you.

Smuggling

The smuggling of refrigerant is perhaps the most lucrative and the most dangerous of refrigerant crimes to partake in. The concept of smuggling refrigerant has been around at least a decade now. It may have been around earlier but I first heard about it when the world began to phase out R-22. Each country had it’s different phase out dates but across all of them one common thread was the implementation of import and production quotas. Once a quota was met no new R-22 could be imported/manufactured in that country. These quotas kept the price high and opened the market for smugglers. I can go through numerous examples of this happening around the globe and even right here in the United States. Let’s look at just a couple of them:

  • In 2015 Russia found twenty tons of R-22 refrigerant being illegally imported. It was disguised as R-134a cylinders. They had originated from China. – Source
  • In 2013 A California resident was caught importing R-22 cylinders illegally by having them disguised as R-134a cylinders. He was travelling back and forth between America and China arranging shipments. He is now facing up to ten years in prison for his smuggling operation. – Source
  • In 2013 Tonga caught thirty cylinders R-22 being illegal imported into their country. Again, they were disguised as R-134a. Now, five years later, the cylinders still sit at the customs office of this island nation. – Source

These are not even close to all of the cases. It happens all over the world: Europe, Middle East, Russia, America, everywhere. In most of these smuggling cases we find that the disguised refrigerant is originating from one country, China. Most of the time they used R-134a as their go to disguise. It has gotten to the point now that customs agents are now using refrigerant identifiers and testing random shipments to ensure no excess R-22 is being imported under their noses. (This is how they caught the Tonga shipment.)

As the world begins to move away from HFC refrigerants we are now beginning to see the smugglers moving away from R-22 and towards R-134a. I had mentioned earlier that R-134a’s price had gone up nearly eight times in Europe. This led to thefts of various manufacturers. Well, it has also led to increased smuggling from China. In some cases the product is marketed as R-134a but it is being shipped in disposable cylinders instead of the required reusable ones that we are all familiar with. Anything to save a bit of money and increase that margin.

The European Union is on the lookout for these smugglers and we here in America should be as well. In 2018 I would say that the prospects of smuggling into the Untied States have gone way down mainly due to the overturning of the EPA’s proposed HFC phase down and also due to the falling price of R-22. Since R-22 is hovering in the three-hundred dollar range a cylinder this year it may just not make sense to go through the risk of smuggling today. If prices begin to creep back up though, be on the look out. If you do see a price on refrigerants that seems to good to be true then be wary as you may be purchasing stolen or illegally imported product.

Conclusion

This was an interesting article to write as I never thought I would see organized crime on refrigerants. But, if there is a high enough profit opportunity then there are always going to be those bad apples that take the chance and break the law. While we are not having the extent of problems that Europe is having with illegal refrigerants it very well may come our way in the future as we move closer towards phasing out HFC refrigerants.

Thanks for reading,

Alec Johnson

RefrigerantHQ

Sources

 

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