The European Union’s fluorinated greenhouse gas (F-Gas) market is undergoing a radical transformation. This shift is not driven by market dynamics alone, but by the new F-Gas Regulation (EU) 2024/573, which came into force in March 2024 and is arguably the most ambitious climate policy of its kind worldwide. Far from being a simple revision of the 2014 rules, it is a wholesale policy overhaul designed to achieve a near-total phase-out of F-gases by 2050, a target that goes far beyond the global requirements set by the Kigali Amendment.

An Aggressive HFC Phase-Down

At the heart of the regulation lies an exceptionally ambitious hydrofluorocarbon (HFC) phase-down schedule. The law mandates a sharp 60% reduction in the HFC quota by 2025 relative to baseline levels, with further cuts planned to reach 95% by 2030. This trajectory is significantly more demanding than the United States’ AIM Act, which targets an 85% reduction by 2036. The disparity creates a challenging environment for multinational companies, as products compliant with U.S. law may fall short of EU requirements. The EU is consciously leveraging its regulatory influence to accelerate the adoption of natural refrigerants, effectively setting a de facto global benchmark for forward-looking businesses.

The regulation takes a multi-pronged approach, combining stringent quotas with outright bans on equipment containing F-gases. The first wave of prohibitions, which took effect on 1 January 2025, includes:

• Self-contained commercial refrigeration equipment with a global warming potential (GWP) of 150 or more.
• Appliances using F-gases with a GWP of 2,500 or higher.
• Single split air-conditioning systems with less than 3 kg of F-gases, where the refrigerant’s GWP must be below 750.

Stricter requirements on leakage prevention, along with mandatory recovery and recycling of refrigerants at end-of-life, further reinforce the system. By creating controlled scarcity of HFCs, the EU aims both to drive prices upward, making natural alternatives more competitive, and to ensure that these powerful greenhouse gases are not released into the atmosphere.

Market Disruption and Price Volatility

This artificially induced scarcity has been the main driver of market disruption and price instability. Since 2014, the cost of conventional refrigerants has surged by as much as 1,000%. The 2025 quota cut was widely expected to trigger another wave of price hikes. Yet, recent market data suggest a more nuanced reality: prices for certain HFCs, including R410A and R134a, actually dipped slightly in Q2 2025. This fragile stabilisation is the result of stockpiling ahead of the quota cut, the rising use of low-GWP alternatives, and, crucially, the persistence of illegal F-gas trade.

The black market, fuelled by high costs and limited legal supply, remains a significant obstacle to the EU’s climate ambitions. Estimates suggest illicit trade may account for 20–25 million tonnes of CO₂ equivalent. The EU has stepped up enforcement accordingly. In late 2024, Dutch authorities seized nearly 4,800 cylinders of illegal F-gases at the Port of Rotterdam, valued at around €1.5 million. A subsequent joint customs operation intercepted more than 400,000 tonnes of CO₂ equivalent. The regulation’s emphasis on stronger enforcement, through increased digitalisation and automated customs controls, is intended to make illegal trade riskier and less viable.

Compliance Risks for Businesses

The penalties for non-compliance are severe, ranging from fines of €10,000 to over €50,000, to the confiscation of goods at customs. Such outcomes can cause major operational disruption and reputational damage. Businesses must therefore adopt a proactive compliance strategy, including meticulous record-keeping and reliance on certified service providers.

Towards a Sustainable Future: Natural Refrigerants and Innovation

The European F-Gas market is not only defined by regulation and disruption but also by innovation and opportunity. As the market for high-GWP HFCs contracts, the industry is accelerating its transition to sustainable, low-GWP alternatives.

Natural Refrigerants: The “Future-Proof” Choice

Natural refrigerants such as carbon dioxide (CO₂), propane (R290), and ammonia (R717) are emerging as the most future-proof solutions. With negligible global warming potential and minimal regulatory risk, they offer clear advantages over synthetic options. Their prices are also far more stable than HFCs, which have experienced extreme volatility. For example, propane and CO₂ prices have remained steady, while HFCs have seen surges of up to 1,000%. Natural refrigerants can also deliver improved efficiency: in some applications, R290 is more than 10% more efficient than R404A.

Adoption is already widespread. The use of CO₂ in supermarket refrigeration grew 28-fold between 2013 and 2023. In the heat pump sector, vital to Europe’s energy transition, new F-gas restrictions are compelling manufacturers to adopt natural refrigerants. Subsidies that favour heat pumps using natural refrigerants are further reinforcing this trend. Europe is expected to lead the global uptake of hydrocarbons in residential and commercial HVAC markets, with dominance projected by 2032.

The Complicated Case of HFOs

Hydrofluoroolefins (HFOs) offer a low-GWP, synthetic alternative and are often seen as transitional solutions. However, their long-term viability is under scrutiny. HFOs degrade into trifluoroacetic acid (TFA), a persistent “forever chemical” classified as a per- and polyfluoroalkyl substance (PFAS). This environmental concern, under active review at EU level, poses a significant regulatory risk—making natural refrigerants the safer long-term option for businesses seeking durable solutions.

Strategic Imperatives for Business

Success in this new environment requires more than compliance. Companies must proactively re-evaluate their product portfolios and supply chains to embrace low-GWP refrigerants. Key strategies include:

• Investment in recovery and reclamation: reclaimed refrigerants are exempt from HFC quotas, ensuring supply continuity as virgin HFCs become scarce and costly.
• Integration of natural refrigerants: enabling both compliance and economic advantage through cost stability and efficiency gains.
• Leveraging digital tools: systems such as the EU F-Gas Portal help maintain robust records and transparent supply chains.

The HFC refrigerant market, valued at around $3.4 billion in 2025, is forecast to contract at a negative compound annual growth rate of -5.5% between 2025 and 2033. This reflects not incremental decline, but a wholesale replacement of legacy technologies with sustainable, future-proof alternatives.

How AFS Energy Can Help

The new EU F-Gas Regulation has ushered in an era of profound change, risk, and opportunity. Navigating the accelerated HFC phase-down, a complex web of product bans, and volatile refrigerant pricing requires deep expertise and foresight.

AFS Energy can support you in this transition by providing:

• Tailored advisory services to clarify compliance obligations and chart a strategic roadmap towards sustainable alternatives.
• Market intelligence on pricing and supply dynamics, enabling informed decision-making and risk mitigation.
• Technical guidance in selecting natural refrigerants suited to your applications, from commercial refrigeration to heat pumps.
• Business model restructuring to harness the economic and environmental benefits of low-GWP technologies.

Do not allow regulatory complexity to become a barrier. With AFS Energy as your strategic partner, you can transform compliance into competitive advantage and position your business for success in the climate-neutral economy of the future.