World's Worst Greenhouse Gas Spurs Global Smuggling Rings

  • Efforts to ban chemicals creating black market for HFCs
  • `People talk about it as having the same profit as drugs'

Every year, diplomats gather to review progress in implementing the Montreal Protocol, a 1987 treaty that limited global use of chlorofluorocarbons and other ozone-eating chemicals. This year’s meeting, set to open Nov. 1 in Dubai, will target hydrofluorocarbons, a class of ozone-friendly coolants developed to replace CFCs that have turned out to be incredibly potent greenhouse gases, thousands of times more effective at warming the planet than more common emissions like carbon dioxide and methane.

The U.S. and Europe have taken measures to ban HFCs and are pushing other countries to do the same, as well as offering financial aid to help poorer countries switch to newer refrigerants.

Environmentalists say they fear another round of chemical bans could invigorate the worldwide black market in restricted coolants, which are generally cheaper than their replacements. Under the Montreal Protocol, developing countries have been allowed to keep producing some coolants barred in the U.S. and Europe for several years, creating a ready supply for traffickers.

“There’s an enormous amount of money to be made,” said Shamila Nair-Bedouelle, head of OzonAction, a United Nations agency that oversees worldwide compliance with the chemical bans.

Hiding Places

Illicit chemicals have been shipped inside containers of oranges and glass ornaments, hidden in canisters-within-canisters designed to fool port inspectors and squirreled away on fishing boats plying the South China Sea. In Canada, authorities say one company imported banned coolants inside used jet cockpits, turning them into the industrial equivalent of drug mules

In June, customs officials in the United Arab Emirates seized more than 13,000 empty refrigerant cylinders at the Port of Ajman that authorities believe were destined to be filled with banned chemicals.

The leading manufacturers of replacement chemicals, Chemours Co. and Honeywell International Inc., have responded with education campaigns and surveillance programs. They’ve also conducted joint raids with local authorities.

“People talk about it as having the same profit as drugs without the same risks,” said Julien Soulet, Honeywell’s managing director for Europe, the Middle East, and India.

Black Market

About 3,700 tons of banned refrigerants flow through East Asia and the Pacific region alone each year, a haul worth about $68 million in 2013, according to a UN report. Most of it comes from China, the world’s leading producer of refrigerants. Some chemicals are exported to countries where the coolants are still legal, but a portion finds its way to brokers who also serve the black market.

The middlemen ship to ports across Asia, often using front companies in the Philippines and Indonesia that divert materials to the U.S., Europe, and Russia, the report said. In April the UN said a program designed to connect customs officials across borders stopped the transfer of 545 tons of ozone-depleting substances in 2014.

While smuggling is often a sideline venture for legal manufacturers and brokers, the trade also draws in “transnational criminal networks spanning different continents and nationalities," the UN found.

Port Explosions

In 2011 refrigerated shipping containers exploded in Brazil, China, and Vietnam, killing three port workers. Investigators determined coolant in the containers’ systems had been blended with methyl chloride, a World War II-era chemical that sells for about 25 cents a pound, a fraction of what legal refrigerants cost.

U.S. prosecutors are stepping up enforcement against companies that buy illegal refrigerants, said Drusilla Hufford, director of the Environmental Protection Agency’s stratospheric protection division. In 2014 an air-conditioning company in Miami was fined $275,000 and sentenced to five years’ probation after pleading guilty to importing a restricted chemical.

“They will not be the last ones,” Hufford said.

Smuggling Heyday

In the heyday of refrigerant smuggling in the 1990s and 2000s, chemical traffickers could get “a better return on their investment than cocaine," without the risk of mandatory minimum sentences imposed on drug dealers, according to Thomas Watts-Fitzgerald, an assistant U.S. attorney who’s prosecuted cases in Miami, a hot spot for illegal chemical shipments.

Cheaper substitutes and a crackdown by law enforcement have dimmed the allure, he said, though smugglers can still turn a healthy profit. In 2010, U.S. prosecutors won a conviction against St. Louis-based Mar-Cone Appliance Parts Co. for illegally importing more than 100 tons of HCFCs, another ozone-eating chemical. The company probably cleared a 40 percent profit, Watts-Fitzgerald estimated.

“There’s a phenomenal amount of this stuff still out there," he said. “We could backslide."

(An earlier version of this story corrected the spelling of a name in the eighth paragraph.)

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