Why did EPA institute an HCFC allowance allocation system?
To ensure that the U.S. achieves the required reductions in production and consumption of HCFCs that were agreed to under the Protocol, EPA developed a marketable allowance system. Such a system was selected for the chlorofluorocarbon (CFC) phaseout and proved highly successful. It was the most economically efficient system of all the methods considered, being market-based and relatively simple to administer. The allowance system retains the flexibility for industry to continue to operate efficiently, while ensuring the U.S. does not violate the parameters agreed to as a Party to the Protocol. How does the HCFC allowance system work? Each producer or importer is allocated allowances (one allowance per each kilogram of HCFC), based on historical production and import activity. When a company then produces or imports each type of HCFC, it expends an allowance for each kilogram of the HCFC produced or imported. If a producer expends allowances to make HCFCs, then exports those HCFCs, the
