As legislation phases out climate-damaging refrigerant gases, smugglers have found a thriving black market for them online.
By Amy Feldman, Forbes Staff
One warm, clear day in October 2022, an unremarkable white Dodge Caravan crossed the Tijuana border into the United States. Hidden under a paint tarp were 10 metal canisters of a toxic greenhouse gas. For nearly four months, a San Diego man had been buying it in Mexico and driving it across the border to sell — on Facebook and elsewhere online.
On Facebook Marketplace, amid postings for old couches and children’s toys are voluminous listings of super-polluting gasses called hydrofluorocarbons, or HFCs, and their ozone-destroying precursors chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs). These chemical refrigerants are a significant cause of climate change and are banned from being imported in some cases and heavily restricted in others. And they are big business for smugglers.
“Back in the 1990s, the street value of CFCs was nearly that of cocaine,” Avipsa Mahapatra, the non-profit Environmental Investigation Agency’s U.S. climate campaign director, told Forbes. “This is not nitpicking on a small, little thing that nobody cares about. It is lucrative, and the criminal trade was rampant in the ‘90s.”
“The question isn’t whether we will prevent climate change, because that opportunity has already come and gone. The question is whether we will prevent catastrophic climate change.”
It is similarly rampant now. Michael Hart, the San Diego man, who is 58, was indicted in the U.S. District Court for the Southern District of California in February for illegally importing these environmentally destructive refrigerants into the U.S. – in the first criminal case of its kind in the country. Hart has pleaded not guilty. His attorney Sebastian Llewellyn Swain-Gil did not respond to a request for comment.
A search of just New York and California on Facebook Marketplace shows more than a hundred sellers peddling what appear to be restricted refrigerants. In one such listing, a Los Angeles seller offered four different varieties of “100% brand new refrigerant freon,” with prices ranging from $280 to $380 per canister.
“Everyone is trying to sell them because in a little while they’re not even going to be useful,” said one New York-area seller who spoke on the condition that he not be named.
The EPA’s top cop, David Uhlmann, who is assistant administrator for the Office of Enforcement and Compliance Assurance, told Forbes that he expected “a significant number of cases at the border for the next several years” due to the demand for restricted HFCs. These harmful chemicals, after all, are used in older refrigerators, air-conditioning systems and supermarket coolers, and upgrading to new appliances that use more environmentally friendly alternatives is expensive.
Bipartisan legislation that passed in 2020 mandates HFCs be phased down by 85% by 2036, and this year marks the first significant cut on the way to those lower legal limits. (See chart below.) As the restrictions have raised prices for legal HFCs and made them tougher to get, a black market has sprung up to fill in the gap. “We have detected smuggling activity on the southern border and we have detected smuggling activity at the ports,” Uhlmann said. “We are also going to need to address the illegal sales of HFCs in the years ahead.”
SLASHING SUPER-POLLUTANTS
Legislation passed in 2020 requires the phasedown of greenhouse gases known as HFCs by 2036. This year was the first big drop from the baseline consumption level of 302.5 million metric tons of CO2 equivalent annually.
The crackdown will involve both cases against individuals, like Hart, and actions against companies that are illegally importing greenhouse gases or doing so above the amounts they’re allowed. On March 21, the EPA announced a settlement with Resonac America to address the company’s illegal import of 6,208 pounds of refrigerants equivalent to 41,677 metric tons of CO2, according to the EPA. That’s like driving more than 9,000 gas-powered cars for a year. The company agreed to pay a penalty of $416,003 and destroy 1,693 pounds of the illegal refrigerants to resolve the allegations of violations.
In one indication of the problem’s potential scale, in Europe, which is further along in its crackdown on greenhouse gases than the United States, the EIA estimated that illegal greenhouse gases were likely between 20% and 30% of the legal trade. The EIA’s Mahapatra said that the U.S. might see similar numbers, or perhaps more, which would be the equivalent of adding about 12 million gas-run cars to U.S. roads.
Given HFCs’ outsized role in climate change, Uhlmann made addressing them one of the first things he focused on after being confirmed to his role last summer. “The question isn’t whether we will prevent climate change, because that opportunity has already come and gone. The question is whether we will prevent catastrophic climate change, and allow our children and grandchildren to have a sustainable future,” Uhlmann said. “To underscore the stakes here, the global phasedown of HFCs by 2036 will shave a half degree centigrade [Celsius] off global warming.”
That’s a huge deal: Scientific consensus is that global temperature increase should be limited to 1.5 degrees Celsius over pre-industrial levels by the end of this century. If it’s not, the impacts of climate change could be severe, including more frequent heat waves, more severe droughts and more intense storms, potentially disrupting food supplies and increasing the spread of disease.
Refrigeration helped to industrialize America, and the world, after CFCs were first synthesized in 1928. By the 1950s, they cooled our cars, homes and office buildings, and preserved our food. But by the 1980s, researchers realized those gases were depleting the ozone layer, causing a huge hole. In 1985, scientists from the British Antarctic Society discovered that ozone values had been steadily dropping over their research stations when the sun appeared each spring. Using satellite data, NASA scientists revealed that the hole actually covered the entire Antarctic continent. The global climate agreement known as the Montreal Protocol, signed in 1987, aimed to reverse the damage by getting rid of CFCs. Its proscriptions began reversing some of the damage. A U.N.-backed panel of scientific researchers predict the ozone layer over the Antarctic will return to its 1980 level by 2066 — assuming current policies stay in place.
HFC refrigerants, which don’t destroy the ozone layer, eventually replaced the CFC gasses that preceded them. But they too are super-pollutants and are hundreds to thousands of times more potent than carbon dioxide (CO2), which is among the leading causes of the global rise in temperature. In addition to the significant harm they cause the environment, black market refrigerants also pose safety risks to installers and users.
“Freon is destroying the ozone, yes, and that’s why they outlawed it. But I’m selling it because somebody can put it to use.”
Uhlmann, who had previously worked as a federal prosecutor and was chief of the Environmental Crimes Section at the U.S. Department of Justice for seven years, sees parallels between today’s efforts to crack down on HFCs and earlier efforts to stanch the flood of CFCs. Demand was “through the roof,” after the CFC phasedowns began, he said. “It was much cheaper to purchase illegally smuggled freon than to replace air-conditioning units. At the Justice Department and at EPA, we were extremely busy throughout the 1990s and into this century addressing freon,” he said.
In one high-profile case in 2011, an executive at St. Louis appliance-parts company Marcone was caught on wiretap, smuggling foreign gas and selling it at discounted prices. Marcone was ordered to pay $900,000 and to forfeit nearly $200,000 in illegal proceeds; the executive was given a 17-month prison sentence.
“We expect that HFC smuggling will follow a similar pattern to what we saw with CFC smuggling unless we’re able to clamp down at the border and cut down illegal smuggling right from the start,” Uhlmann said.
On Facebook Marketplace, a quick search pulls up dozens of listings for a wide range of refrigerants. In one Bronx, N.Y. an ad for a regulated commercial refrigerant (R404a), priced at $250, a photo showed boxes of coolants that are now being phased out. “American brand no Chinese knockoffs. Great deal don’t miss this!” the listing said. In Fremont, California, meanwhile, a seller advertised that they’d slashed the price of a 30-gallon canister of an HCFC refrigerant known as R-22 from $750 to $500. That ad was deleted before this story was published.
“The older stuff costs a lot of money. The 22, the green can, that used to be $100 to buy the can. Now it’s like $900, but you know it’s also obsolete,” said the New York-area seller. “Freon is destroying the ozone, yes, and that’s why they outlawed it. But I’m selling it because somebody can put it to use, and I have some old stuff in my warehouse I’ve been trying to sell.” (R-22 is an older HCFC used in residential air conditioners; its production and import was phased out in 2020, though servicing of existing systems with it is still allowed.)
The price of smuggled refrigerants, which likely also avoided paying duties, is generally lower than those that are legal under the phasedown rules. The cost of legal refrigerants can be two to four times higher in a regulated place like the U.S., said Shawn McCloskey, America’s senior business director of thermal and specialized business solutions at Chemours, the DuPont spinoff that is a large manufacturer of refrigerants. That could encourage smugglers to take advantage of the arbitrage with less regulated places.
“Back in the 1990s, the street value of CFCs was nearly that of cocaine. This is not nitpicking on a small, little thing that nobody cares about. It is lucrative.”
Consider: A 24-pound cylinder of 404-A refrigerant on Refrigerant Depot, an Orlando, Florida-based seller where EPA-certified buyers can purchase the gas, goes for $499. On Facebook Marketplace, there are listings for similar canisters for $230. Older, ozone-depleting refrigerants that are only available from stockpiles due to the ban on their production and import are more expensive. The older ozone-depleting R-22 refrigerant, for example, costs $1,200 for a 30-pound canister on Refrigerant Depot. On Facebook Marketplace, there are listings for similar gases priced between $300 and $800. As the amount that’s allowed to be produced or imported decreases over time, the prices will go up for refrigerants being sold legally — and black market prices will rise as well.
Forbes reached out to 92 sellers in the New York and California areas. At least nine of them took down their listings after being contacted. “Sorry it’s not available,” wrote one, before removing the listing. (It’s tough to tell whether a particular online transaction is legal or illegal because the same chemical could be allowed in some circumstances and banned in others.)
“If someone was selling cocaine on their website, there would be a crackdown,” said Fionnuala Walravens, a researcher at EIA, who has studied HFC smuggling in Europe. “They [Facebook] need to take the responsibility for this as one of the largest companies in the world making one of the biggest profits in the world.”
A search of other online marketplaces also showed refrigerants for sale, though not at the same quantity as on Facebook Marketplace. On OfferUp, which was named in the criminal greenhouse gas smuggling case in San Diego, a search showed some HFC refrigerants for sale. And on Ebay, a smattering of refrigerants, some in $49.99 3-packs, were also available. So, too, on Craigslist, where a Staten Island listing shows a 25-pound pink canister of another regulated gas. “Brand new sealed 400 firm,” according to the ad.
Facebook parent Meta states that buyers and sellers are “responsible for complying with all applicable laws and regulations.” It also says that “hazardous materials and substances” are prohibited, but it’s unclear if that includes refrigerant gases. Meta did not respond to requests for comment.
OfferUp spokesperson Keith Carpenter said by email that OfferUp prohibits “all regulated chemicals, poisons or substances, which would include HFCs, HCFCs and other regulated refrigerants,” and that it removes every listing for regulated chemicals that it discovers. “We don’t see a large number of listings, but they do get posted from time to time,” he said. Carpenter said OfferUp has updated its guidelines recently to remove more refrigerants, even some that may not be regulated.
eBay spokesperson Lauren Burch said in a statement that its hazardous materials policy “prohibits hydrofluorocarbons (HFCs) and ozone-depleting chemicals, as well as all non-EPA-approved substitute refrigerants.” She noted further that the company had deployed “significant resources to prevent and remove prohibited items from our marketplace.”
Craigslist rules prohibit the selling of hazardous materials and state that “users must comply with all applicable laws.” Craigslist did not respond to requests for comment.
As the quantity of greenhouse gases that are legally allowed decreases, a flood of refrigerants is likely to come not just from Mexico, as in the first criminal case against an alleged smuggler, but also from China, on massive container ships, and from both individuals and companies. An interagency federal task force, co-led by the EPA and the Department of Homeland Security, has already (between January 2022 and May 2023) prevented illegal imports equivalent to more than 1 million metric tons of carbon dioxide.
EIA researcher Walravens, who studies greenhouse gas smuggling in Europe, said that when HFCs were restricted on the continent, their prices soared, from five times when the phasedown started to a peak of nine times. “The money to be made is astronomical,” she said. “You are very unlikely to get caught, and if you get caught your penalty will be very small. So it is better than drugs.”
Smuggled gas, after all, is relatively easy to conceal in small containers that can be mislabeled to mask their contents. With 11 million maritime containers arriving at U.S. ports each year, it’s impossible to search all of them, and a court ruled last June that the EPA could not require QR codes to track the whereabouts of specific cylinders.
“The problem is if we detect HFCs, we have a big job to prove those are illegal, whereas if we come across drugs, we know they are illegal,” Walravens said. “I think the challenge is very real.”
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