Illegal Trade Bulletin: Issue 10

In the 10th issue of EIA’s Illegal Trade Bulletin, we highlight developments related to illegal trade from the latest Montreal Protocol meeting in Bangkok, a recent enforcement success in the U.S., and warnings from industry regarding illegal refrigerants and non-compliant cylinders.

Strengthening the Montreal Protocol to Address Illegal Trade: Takeaways from OEWG48

From July 13-17, 2026, EIA joined other observers and delegates in Bangkok, Thailand for the 48th Meeting of the Open-Ended Working Group (OEWG48) of the Parties to the Montreal Protocol, where decisions are drafted and discussed ahead of the annual Meeting of the Parties. EIA provided analysis and recommendations on key agenda items, including on illegal trade prevention, in our briefing, Replenished Funding, Renewed Ambition: Meeting the Climate Crisis Head-On.

At OEWG48, illegal trade discussions centered around the agenda item on further strengthening Montreal Protocol institutions, under which two proposals were submitted for consideration. 

There was broad agreement among Parties that licensing systems are central to illegal trade prevention, by enabling authorities to reconcile import and export data, detect suspicious trade patterns, and verify shipments. Parties discussed how licensing systems could be strengthened, while recognizing differences in national policy and legal frameworks, and implementation capacities. Many Article 5 (developing) countries emphasized that any new measures, including reporting requirements, would place an additional burden on Parties already facing technical and financial challenges in meeting compliance requirements, and must remain voluntary. 

There was discussion on the need to clarify that all licensing systems in place include the import and export of used, recycled, and reclaimed controlled substances, not just newly produced ones, which is already an obligation under the Montreal Protocol. As demand for reclaimed refrigerants grows with the HFC phase-down, ensuring that the flow of reclaimed and recycled substances is properly monitored and reported will become increasingly important for distinguishing legitimate from illegal trade.

Extensive discussions were also held regarding whether Parties should encourage licensing systems to cover transhipment, re-export, and free trade zones. While a number of Parties emphasized the administrative complexity of monitoring these trade routes, these pathways are well documented routes where limited oversight can be exploited by illicit actors to disguise the origin and destination of smuggled controlled substances and circumvent customs authorities. Existing guidance from the World Customs Organization (WCO) and the United Nations Environment Programme (UNEP) provides a foundation, but further work is necessary to develop practical ways to improve transparency and traceability across these trade routes without creating disproportionate administrative burdens.

Delegates review text during a meeting on further strengthening Montreal Protocol institutions at OEWG48, 13-17 July 2026 in Bangkok, Thailand.

Parties ultimately agreed to carry this agenda item to the annual Meeting of Parties (MOP38) for further discussion and decision. As Parties prepare for MOP38 and the 10th anniversary of the Kigali Amendment, it is paramount that these discussions move to concrete decisions that strengthen Montreal Protocol institutions and combat illegal trade, paired with sufficient funding for Article 5 developing countries to build their capacities. This should include support for Article 5 Parties to implement best-practice licensing systems, to enhance monitoring across the supply chain, such as through the deployment of digital tracking tools, and to adopt harmonized procedures for the responsible management of seized and denied controlled substances through to their final disposition. 

U.S. Enforcement Action Prevents Refrigerant Smuggling

On June 17, 2026, after pleading guilty to refrigerant smuggling, an individual was sentenced to pay a $1,400 fine and complete three years of probation. According to authorities, the individual attempted to smuggle six 25-pound cylinders of HFC refrigerant, R-410A, into the U.S. on May 18, 2024, at the Brownsville, Texas port of entry. 

These six cylinders contained 150 pounds of R-410A. With a high global warming potential (GWP) of 2,088, that refrigerant represents approximately 131 metric tons of CO₂e, the same CO₂ emissions from burning more than 145,000 pounds of coal. This case shows that even relatively small volumes of smuggled refrigerants can have a significant climate impact, underscoring the importance of effective enforcement as a deterrent to illegal trade. 

Industry Warnings about Counterfeit Refrigerants in the U.S. and UK

Recent warnings from industry on both sides of the Atlantic draw attention to suspected counterfeit refrigerants as an increasing concern as markets transition to lower-GWP alternatives. 

Industry representatives in the U.S. are warning about the circulation of counterfeit R-454B cylinders, and the safety risks, potential damage, and increased liability that the mislabeled refrigerants can create for businesses and end users. They emphasized that distributors and contractors should source refrigerants only through authorized suppliers, verify products throughout the supply chain, and report suspected counterfeit or mislabeled products to the U.S. EPA.

Meanwhile, there are similar concerns in the UK. On June 16, 2026, an international refrigerant distributor, published an article warning that it had identified illegal and potentially non-compliant cylinders of HFO refrigerant (R-1234yf) circulating in the UK, alleging these cylinders may have originated from China, may contain illegally manufactured or unauthorised R-1234yf, and lack important stabilizing additives that protect equipment and prevent contamination. Additionally, the refrigerant cylinders themselves might be non-compliant. Reported issues included missing or mislabeled markings on tare weight, equipment pressure, and other product traceability details that may not meet UK compliance requirements. As highlighted in previous EIA bulletins, government warnings regarding non-compliant refrigerant cylinders have been published in the U.S., and about falsely labelled counterfeit refrigerants in Canada, and pose a dual threat to climate and safety.

Notably, the warnings about reported illegal counterfeits for R-454B and R-1234yf concern refrigerants used as alternatives to higher GWP products under the global HFC phase-down. This suggests that illicit actors are adapting to regulatory transitions and changes in market demand and technologies, highlighting the need for enforcement strategies that match rapidly changing markets and fluctuating prices. 

Together, the discussions at Montreal Protocol meetings, recent enforcement actions, and industry warnings highlight the fact that preventing illegal trade requires actions across the entire supply chain. Strong licensing systems, support for enforcement, customs officer training, and mechanisms and digital tools to trace and identify refrigerants for enhanced supply chain transparency, are all needed as we enter into the second decade of the Kigali Amendment. As Parties prepare for MOP38 and negotiations on the next Multilateral Fund replenishment, which supports Article 5 Parties through technical and financial assistance, investments in enforcement and institutional strengthening should be recognized as essential elements for compliance and successful implementation of climate and ozone objectives. 

As cooling demand amid heat waves peaks across much of the Northern Hemisphere, due diligence remains essential for anyone purchasing, handling, or servicing refrigerants. Check out EIA’s list of red flags that could suggest a refrigerant transaction is potentially unsafe, unauthorized, or should be reported to the authorities. Just as governments and enforcement authorities play a critical role in preventing illegal trade, businesses and consumers also have a responsibility to purchase refrigerants from legitimate sources and remain alert to potentially non-compliant products. This includes exercising particular caution with e-commerce and (informal) online marketplace platforms, where product origin, compliance, and product and seller legitimacy can be difficult or impossible to verify. 

Reminder – Red flags to watch for include:

• Unusual pricing, sales channels, or shipping methods
• Missing or incomplete product documentation
• Improper packaging, labeling, or cylinder non-compliance
• Lack of proper documentation or certification
• Suspicious sourcing or supply chain