Criminals get smart as illegal HFC trade persists

UK: Despite crackdowns by authorities significant levels of illegal refrigerant trafficking persist in Europe with criminals becoming smarter at dodging detection.

These are the conclusions of a new report by the Environmental Investigation Agency (EIA) which suggests that organised criminals, attracted by high profits, are taking advantage of weak law enforcement to meet the demand left by the transition away from HFCs.

The new undercover investigation has uncovered evidence of traders primarily sourcing HFCs from Turkey and China to import illegally into the EU. Trafficked from Bulgaria and other countries on the edge of the bloc, these chemicals are smuggled across the continent to destinations such as Greece, Germany, France, Italy, Portugal and Spain.

The new investigation reveals that traders are becoming smarter at dodging detection, employing tactics such as avoiding banned disposable cylinders and disguising HFCs as lower GWP less-regulated HFO refrigerants.

The aim of the latest investigation was to find out if the situation had changed since the findings of the last EIA report in 2021 which exposed a pan-European illicit market for HFCs, which largely fell under the radar of law enforcement agencies. 

The EIA deployed undercover operatives to three locations which had previously played important roles in the illegal HFC market – Spain, Bulgaria and Turkey. 

Speaking to numerous HFC traders, EIA investigators found that illegal HFCs continue to be imported into the EU and are readily available on the EU market. Traders of illegal HFCs continue to openly use websites such as Facebook Marketplace, eBay and OLX to to sell their goods. 

Spain 

EIA investigators returned to Spain in 2022, following earlier investigations which had highlighted Spain as an illegal HFC trade hot spot. The report suggests that a significant trade in illegal HFCs continues in Spain, with non-quota cylinders smuggled in via countries including Turkey, Ukraine, Poland, France, Serbia and Italy. 

This black market is fuelled by a combination of high demand for HFCs, limited HFC quota and Spain’s national HFC tax which, in the case of HFC134a, can double the refrigerant’s market price.

The EIA identified 57 unique online places of sale for HFC gases in Spain, including online marketplaces such as Milanuncios.com and e-commerce websites. 

Investigators spoke with 12 traders who were able to source large quantities of HFCs (more than five tonnes), raising suspicions of illegal activity. Nine traders offered EIA investigators HFCs in illegal disposable cylinders and two proposed making a transaction without any kind of invoice. 

EIA spoke to numerous traders who had ready availability of R404A, an HFC which is already banned from most equipment in Europe due to its high GWP. One trader is said to have told the EIA in May 2022 that having R404A was like owning gold.

One trader, who used his daughter’s Facebook account to find new customers on Facebook Marketplace, claimed to have clients in the industrial cooling and ice industry in Córdoba. Another Spanish trader claimed to have clients in the dairy industry. 

Investigators also spoke to a Russian woman based in Barcelona who had posted more than 100 adverts for HFCs on Facebook. The woman, who claimed to have Ukrainian bosses, was awaiting a shipment of 1,200 cylinders of R404A. She admitted that supply has become a problem since the outbreak of the war in Ukraine and now tended to source from Poland. 

A Romanian HFC trader, also based in Spain, told EIA investigators that they continued to source from Ukraine but list the end shipment destination as France to avoid paying the Spanish HFC tax. The trader also claimed that some Spain-based groups of Eastern European HFC traders were in the habit of bringing HFCs into Spain as disposables and then decanting these into refillable cylinders which are less obviously illegal.

Turkey 

With major ports with frequent connections to China and a land border with the EU, Turkey has previously been pinpointed as a popular stop-off point for illegal refrigerant making its way from China to the EU. The EIA also claims that there is also a known ‘moderately high’ risk of corruption at the border.

The EIA suggests that illegal HFCs are either shipped to destinations such as Spain or are smuggled in smaller batches by road across its land borders with Greece and Bulgaria. 

The EIA’s previous report in 2021 accused the Lima Group, an Istanbul-based company selling HFCs and car accessories, as being heavily involved in smuggling non-quota HFCs. The EIA maintains that the illegal activities continue but that the company has changed tactics, now commonly labelling HFCs as HFO1234yf in order to avoid inspections.

Bulgaria 

The EIA’s investigations suggests a steady cross-border trade of non-quota HFCs entering Bulgaria from Turkey and then moved onwards, via bus and truck, to countries such as Spain, Italy and Germany. 

The EIA says it has identified 31 companies or individuals selling suspected illegal HFC gases in Bulgaria. This included e-commerce companies such as Apogee99.com and individual traders, many of whom were active on the Bulgarian online marketplace olx.bg. Twenty-eight of these companies or individuals are said to be actively promoting the sale of HFCs in illegal disposable cylinders. Traders were found to often use fake accounts on online marketplaces to mask their identities.

EIA also spoke to three traders who were willing to offer cheaper non-quota HFCs for sale without an invoice. Bulgarian HFC traders told EIA investigators how non-quota HFCs are moved from Bulgaria into countries such as Greece, Germany, Spain, Italy and France by paying bus and truck drivers to stash the cylinders in their vehicles. The EIA’s investigation also revealed that Bulgarian traders communicate with each other, including about buyers and law enforcement scrutiny, suggesting an organised network.

The latest report – More Chilling Than Ever – calls on the European Commission and all EU member states to prioritise implementation of compliance-related measures under the new F-gas regulation and to step up enforcement.

“As 2024 signals another reduction in HFC supply to EU markets, this risks fuelling demand for illegal HFCs,” commented EIA senior climate campaigner Fin Walravens. “There is an urgent need for coordinated, proactive enforcement efforts across the EU to combat HFC climate crime.”

Findings from the EIA investigations were shared with relevant agencies in order to support enforcement actions.

The latest EIA report can be downloaded here.

Related stories:

Customs report increased illegal HFC seizures – 6 December 2023
BELGIUM: Customs authorities have reported an increase in illegal refrigerant seizures as it clamps down on shipments which contravene Montreal Protocol and European F-gas regulations. Read more

EIA exposes corruption in Romania’s criminal HFC trade – 8 July 2021
UK: The Environmental Investigation Agency has uncovered “systematic corruption” of customs officials in the illegal importation of refrigerants into Europe, with Romania identified as one of the major entry points. Read more