Effective September 1, 2022, the amendment to the Fluorinated Greenhouse Gas Tax Law in Spain came into force, through Royal Decree 712/2022 of August 30, published on August 31 of the same year.
The amendment to the Fluorinated Gas Law consists of updating and expanding taxes on greenhouse gases with high global warming potential. These fluorinated gases are used in the air conditioning, refrigeration, and aerosol industries.
This tax will apply to both the manufacturing and import of pre-charged greenhouse fluorinated gas equipment, as well as the initial charge of refrigerants in new installations.
The European Union has established a quota and licensing system for the commercialization of fluorinated gases for countries that tax their use, applying duties and fees to limit their emission and excessive use.
It is worth noting that similar regulations and levies have also been implemented in other countries such as Australia, Japan, and Canada.
What are Fluorinated Gases?
Before delving into the topic, we consider it important to define what fluorinated gases are for a better understanding of the subject.
These are chemical compounds composed of carbon, fluorine, and other elements, such as hydrogen or nitrogen, and are widely used in various sectors for their properties as refrigerants and fire extinguishing agents. These gases are recognized for their high heat transfer capacity and low toxicity.
Greenhouse gases can retain part of the infrared radiation emitted by the Earth after being heated by the Sun, meaning they are gases capable of retaining energy in the atmosphere.
What Risks Do Fluorinated Gases Pose to the Environment?
Regarding the risks that fluorinated gases pose to the planet, it should be highlighted that their excessive use can cause negative effects on the environment and human health.
Due to their high capacity to retain heat in the atmosphere, they directly contribute to global warming, as well as to the depletion of the ozone layer. Additionally, some fluorinated gases are flammable and can pose a high risk of fire or explosion.
Some of their compounds can be toxic if inhaled in large quantities, causing health damage such as eye and skin irritation, respiratory difficulties, and liver or kidney damage in extreme cases.
For all these reasons, the Fluorinated Gas Law seeks to contribute to the control and rational use of these gases in a safe and responsible manner, as well as to promote more sustainable alternatives.
Measures Applied in the Amendment to the Fluorinated Gas Tax Law
1. Taxes the Possession of Gases in Addition to Consumption
The amendment to the Fluorinated Gas Tax Law extends the levy to the manufacturing or import of pre-charged equipment, as well as to the initial refrigerant charge in new installations.
2. Eliminates the CAF for Installers
Installers will now have to pay the tax when acquiring gas; the CAF will only be maintained for wholesalers.
3. Exemption for Training Schools is Eliminated
Schools will have to pay the tax when purchasing refrigerant gas for their classrooms.
4. The Figure of “Reseller” is Eliminated
The sale of gas between resellers (manufacturers, wholesalers, and installers) will no longer be exempt.
How Does the Amendment to the Fluorinated Greenhouse Gas Law Impact?
1) Increased Costs for Businesses
The impact of this amendment to the Fluorinated Gas Law primarily falls on companies that use these gases in their production processes, as they are required to pay a higher tax for their use. According to expert opinion, this could increase installation costs by 5% to 10%.
This situation leads to increased costs for these companies and, consequently, in the price of the final product or service offered to consumers, which can also negatively affect their competitiveness in the market.
Companies, in search of solutions to reduce costs, may choose to move their production to other countries where regulations are less strict, affecting employment levels and the national economy.
Furthermore, there is controversy generated by the purpose of collecting this tax, as it will not be entirely allocated to environmental initiatives, but rather used for general state budget purposes.
2) Stimulus for the Use of More Sustainable Alternatives
A positive aspect of the amendment to the Fluorinated Gas Tax Law lies in its objective to reduce the use of these gases with high global warming potential.
This aims to lead companies to seek more sustainable and less polluting alternatives for their processes, driving research and development in new air conditioning and refrigeration systems.
Such is the case with Inditer’s CO2 Gas Cooler equipment, designed to be highly efficient and reduce environmental impact.
3) Reduction of Greenhouse Gas Emissions
Another intention of the amendment to the Fluorinated Gas Tax Law is to help reduce emissions, as fluorinated gases are considered to have high potential; their reduction will contribute to mitigating the effects of climate change.
4) Boost for Research and Development of Cleaner Technologies
The need to find less harmful alternatives seeks to drive research and development of cleaner and more sustainable technologies, which can also generate business and employment opportunities in sectors related to climate change mitigation.
5) Compliance with International Commitments
The amendment to the Fluorinated Gas Tax Law responds to international commitments in the fight against climate change, such as the Paris Agreement, allowing compliance with obligations and contributing to the global reduction of emissions.
At Inditer, we are aware of the situation, and therefore we work to be at the forefront of sustainability and environmental protection, developing new technologies that reduce the use and emission of fluorinated greenhouse gases.