EPA’s Illegal HFC Phaseout Rules are Innovation Killers

Published July 20, 2021

It is immensely ironic that EPA’s ham-handed implementation of the American Innovation and Manufacturing Act stifles innovation in manufacturing. They do it with a single rule that has no legal basis, tucked away in a 276 page regulatory proposal.

To make the point I am going to look at a single case, although I am sure there are many others, since HFCs are crucial to many different industries, from semiconductors to medical inhalers. In this case the industry is one I had never heard of — structural foam — where HFCs are what are called the “blowing agent”. That is, it is the gas that makes the foam.

As a civil engineer I find structural foam to be fascinating. My education comes from lengthy comments on EPA’s proposal filed by Structural Composites, Inc (SC). I used to think of structural foam as used in flimsy stuff like drink coolers, cups, etc. Turns out it now rivals materials like aluminum, fiberglass and concrete.

In SC’s case we are talking about truly sturdy stuff like boats and tractor trailers. Their customers just built the first structural foam highway bridge deck. I am not making this up; it is innovation personified.

The AIM Act specifically recognizes the crucial nature of HFCs and it exempts six entire industries from the phaseout, for five years with provision for extension. Structural foam for marine and trailer use is one of the six. The reason is that energy saving lightweight boats and trailers are climate friendly and HFCs are the only known way to make them.

Clearly this industry is poised for a takeoff and the AIM Act says that EPA should allow them all the HFCs they need. They should get “full” allocations based on past, present and future need.

Instead, EPA has arbitrarily limited the HFC allocations to past need, for all six exempt industries. Company allocation requests are limited to their best of the last three years. This obviously rules out any expansion, much less the dramatic growth of a takeoff.

EPA’s hugely constraining proposed rule simply rules out any transition of boats, tractor trailers (or bridges) to energy saving lightweight structural foam. It also rules out breakthroughs in the other industrial categories, including medical, electronic and defense applications.

Here is how the SC comments put it:

Unfortunately, the proposal fails to address such instances where there is a specific new need not accommodated by a formula that relies solely on historical averages. One example of this is a new medical device developed to address a critical new medical issue (such as in a pandemic).

EPA’s proposed approach is more fitting for mature industries than for industries such as ours that are in the early stages of developing and deploying an innovative technology.

In none of these examples would the provision in the AIM Act specifying that for five years EPA needs to fulfill the full quantity of allowances needed” be satisfied by the current proposals approach of relying on historical averages. Thus, EPA should allow an increase of up to 100% for an individual firm or parent company (where there are affiliated firms)…. Additionally, larger allocations should be permitted, after approval by EPA, for a specific need based on specific facts articulated by the firm through a petition.

In short EPA should allow for innovation in manufacturing, which the American Innovation and Manufacturing Act clearly does. This includes new critical applications, like bridges, and new entrants.

EPA should follow the law.

[Originally posted on Committee For A Constructive Tomorrow (CFACT)]