PEARL RIVER, NY – SEPTEMBER 24, 2021 – Hudson Technologies, Inc. (NASDAQ: HDSN) announced that, on September 23, 2021, the United States Environmental Protection Agency (EPA) issued the final rule establishing the framework to allocate allowances for virgin production and consumption of HFCs. The EPA is responsible for the administration of the HFC phase down enacted by Congress under the American Innovation and Manufacturing Act of 2020 (the “AIM Act”).
The AIM Act directs the EPA to address the reduction in virgin HFCs and provides authority to do so in three respects: phase down the production and consumption of listed HFCs, manage these HFCs and their substitutes, and facilitate the transition to next-generation technologies. Congress also required that EPA shall consider ways to promote reclamation in all phases of its implementation of the AIM Act. The final rule, announced yesterday, introduces a stepdown of 10% from baseline levels. The actual number of allowances per allowance holder will be issued by October 1, 2021, and these allowances will apply for the 2022 year. Allowances for 2023 and beyond will be issued at a later date, and a subsequent allowance rule must establish a cumulative 40% reduction in the baseline for 2024.
Brian F. Coleman, President and Chief Executive Officer of Hudson Technologies, commented,
“We have long been supporters of the bipartisan AIM Act and its directive to the EPA relating to the phase down in production and consumption of virgin HFCs, which we believe will have significant positive impact in the efforts to reduce greenhouse gas emissions and global warming. The ODS phaseout tightened the supply of virgin refrigerants more gradually, over a 15-year period. With the AIM Act, in a little over two years there will be a 40% reduction in virgin production and importation from the current baseline. The reduction in virgin supply should help stimulate significant growth of reclamation in the coming years. With the EPA’s publication of the final rule for HFC allowances, we now have more visibility around how we, and others in our industry, are positioned to supply what is already a large, and growing, installed base of HFC equipment. As the virgin supply of HFCs becomes more limited, we anticipate that reclamation will be critical to maintaining necessary supply during this HFC phasedown period and welcome new industry initiatives that help drive refrigerant recovery and reclamation. With our reclamation capabilities and robust distribution network, Hudson is uniquely positioned as both a supplier and a reclaimer, to meet potential supply shortfalls as virgin HFC production is reduced by 85% in the year 2036.
“A key focus for our Company is promoting sustainability and supporting a circular economy in the refrigerant industry, which we have been doing since our existence. Over the last few decades, we have developed an industry-leading reclamation infrastructure and we also offer complementary services in support of reclamation and system optimization. While the current HFC phasedown has similarities to the previous phaseout of R-22 refrigerants, an important difference is that, today, the reclamation industry is established, while HFC reclaim is in its early stages, with Hudson representing approximately 35% of refrigerant reclamation activity in the U.S. Reclamation is a key component of the orderly phasedown of virgin refrigerants and the AIM Act is designed to assist the EPA to promote the growth of reclamation during the HFC phasedown period. We believe the current phasedown represents a significant long-term growth opportunity and Hudson is ideally and competitively positioned to capitalize on these changes to our industry landscape to grow our customer base and capture additional revenue,” Mr. Coleman concluded.