Corrected HFC Baseline and HCFC‑123 Extension

Summary#

These are final changes to the Ozone-depleting Substances and Halocarbon Alternatives Regulations that correct Canada’s HFC consumption baseline and extend a narrow allowance for one HCFC. The baseline was lowered to 18,008,795 tonnes of CO2 equivalent, and the use of HCFC-123 for servicing existing fire‑extinguishing equipment is allowed until December 31, 2029. The regulations came into force when they were made (registered August 25, 2020).

What it does#

• Permanently lowers the Canadian HFC consumption baseline used to calculate how much HFC (measured in CO2 equivalent) can enter Canada. The baseline was changed from 19,118,561 tonnes of CO2e to 18,008,795 tonnes of CO2e.
• That corrected baseline reduces the maximum HFC allowances that importers get under the existing phase‑down schedule (the HFC phase‑down that began on January 1, 2019).
• Allows the limited use of HCFC-123 to service fire‑extinguishing equipment that was already in service as of December 31, 2019, up to December 31, 2029. This is a narrow exception and does not increase the overall HCFC quantity Canada is allowed under the Montreal Protocol.
• Confirms the changes come into force immediately (the day the regulations were made).

Who's affected#

• Importers of bulk HFCs. About 16 companies hold HFC consumption allowances.
• Two of those allowance‑holding firms are small businesses. The change is estimated to cost those small firms about $1,321,600 each over the analysis period (total for the two small businesses).
• Manufacturers and service companies that make or maintain refrigeration, air‑conditioning, and some aerosol products. They are not directly regulated by this baseline change, but they may need to switch to lower‑GWP refrigerants or propellants as availability of high‑GWP HFCs falls.
• End users of equipment that relies on current HFCs — for example commercial refrigeration, building HVAC systems, vehicle A/C — could see higher operating or equipment costs passed along.
• It is unclear whether any HCFC‑123 is currently being used for the covered fire‑extinguishing servicing; regulators expect usage volumes to be minimal.

Why it matters#

• It keeps Canada aligned with its international obligations under the Kigali Amendment to the Montreal Protocol. Correcting the baseline makes Canada’s HFC allowances accurate and preserves compliance with the phase‑down schedule.
• The change is expected to reduce greenhouse gas emissions by about 2.7 megatonnes (Mt) of CO2e between 2019 and 2040. The estimated climate benefits are about $108.9 million, industry compliance costs about $73.4 million, and net benefits about $35.5 million (present value).
• Practically, some refrigerants and propellants with lower global‑warming potential will be used more often. That can mean modest equipment changes or higher operating costs for businesses and, potentially, higher prices for some products or services.
• The HCFC‑123 extension matters mainly for critical fire‑safety systems (for example at airports) where alternatives may not be available immediately. The government expects the environmental impact of this narrow allowance to be negligible because volumes are small.