Introduction

The mechanics of LRM — leak prevention, recovery, reclamation, and destruction — are straightforward. Building the economic and institutional ecosystem required to implement those activities at scale is not. Across the LRM value chain, from technicians who need recovery machines, to aggregators who must build trucking and collection routes, to facilities capable of reclamation or destruction, the constraint is often the same: there is no reliable way to pay for it.

Cascade's theory of change is that short- and long-term financing and policy mechanisms can be deliberately combined or sequenced to stepwise build towards durable lifecycle refrigerant management ecosystems. Early-stage voluntary carbon market projects can demonstrate feasibility, compliance carbon mechanisms can scale and sustain deployment, and policy ultimately embeds LRM as standard practice. Each stage generates the infrastructure, data, and proof points the next stage requires.

Our 2026 roadmap is designed to move that progression forward — and to do so in a region with the largest climate opportunity and significant LRM infrastructure gaps. Our initial focus will be Southeast Asia, which is projected to see a ninefold increase in air conditioners between 2020 and 2040 as incomes rise, economies develop, and extreme heat events become more common due to climate change. As is the case in much of the world, venting refrigerant during equipment servicing and at end-of-life (EOL) decommissioning is the most common practice in these countries.

Cascade's theory of change is that short- and long-term financing and policy mechanisms can be deliberately combined or sequenced to stepwise build toward durable lifecycle refrigerant management ecosystems. Early-stage voluntary carbon market projects can demonstrate feasibility, compliance carbon mechanisms can scale and sustain deployment, and policy ultimately embeds LRM as standard practice. Each stage generates the infrastructure, data, and proof points the next stage requires.

Our 2026 roadmap is designed to move that progression forward and to do so in a region with the largest climate opportunity and significant LRM infrastructure gaps. Our initial focus will be Southeast Asia, which is projected to see a ninefold increase in air conditioners between 2020 and 2040 as incomes rise, economies develop, and extreme heat events become more common due to climate change. As is the case in much of the world, venting refrigerant during equipment servicing and at end-of-life decommissioning is the most common practice in these countries.

What Are We Building Toward?

The Kigali Amendment to the Montreal Protocol sets a clear directional trajectory: HFCs are phased down over time, and lower-GWP alternatives replace them. Unfortunately, transition alone does not solve all of the emissions problems. HFC refrigerants already contained inside billions of air conditioning units and refrigeration systems will continue circulating, leaking, and being vented for decades. Under the Kigali Amendment, developing countries, referred to as Article 5 parties, have a delayed phasedown timetable, meaning that HFC banks in these countries will continue to grow over the next several years. This underscores Cascade’s focus on LRM in Article 5 countries in Southeast Asia.

Sustained, economically viable LRM practices are the ultimate goal. Within LRM, the highest certainty-of-impact action to mitigate emissions from legacy high-GWP refrigerants is destruction. A single kilogram of R-410A, an HFC widely used in commercial and residential air-conditioning equipment, contains a global warming potential 2,088 times that of CO₂. Recovering and destroying these gases permanently eliminates their warming potential from the atmosphere.

The overarching need is for refrigerant recovery infrastructure, including trained technicians with appropriate equipment and access to reclamation or destruction facilities. The challenge is not identifying what needs to happen, it is building functioning recovery markets in places where none currently exist.

Building Recovery Markets: A Theory of Change

Multiple mechanisms can support LRM, including carbon markets, compliance finance, industry investments, and policy. These mechanisms can operate individually or in parallel as market readiness and policy timelines allow. They can also be highly effective when sequenced as stages in an intentional, system-building process, where one mechanism supports the foundation for the next.

The underlying logic is cumulative: policy is most effective when it can build on demonstrated feasibility, and capital flows most reliably into markets whose economics have already been proven at the project level.

Voluntary Carbon Financing: The Zero-to-One Entry Point

In the absence of regulation or policy incentives, refrigerant recovery has no natural revenue stream. It requires significant investment in equipment, trained technicians, logistics, and destruction or reclamation. Voluntary carbon markets can help close this incentive gap by monetizing the climate value of destroyed refrigerants that would otherwise be vented.

As with all carbon markets, crediting integrity matters enormously. LRM carbon credits are only as valuable as the measurement behind them and require rigorous additionality assessments, refrigerant-specific emissions factors, and documented chain of custody for collected gases from recovery through destruction.

Voluntary markets also have real limits: carbon credit prices and trends can be volatile and buyer-dependent, and no country can anchor a national LRM system on voluntary demand from private corporations alone.

Compliance Markets: Enabling Scale

Voluntary projects that have demonstrated LRM carbon credits that are technically feasible and financially viable can open pathways to compliance-grade carbon mechanisms. Under Article 6.2 of the Paris Agreement, countries can enter bilateral agreements to transfer carbon credits known as ITMOs for use toward national climate targets.

Compliance markets bring three things to LRM that voluntary markets cannot: longer time horizons, larger and more predictable demand, and a stronger and more bankable signal to industry actors.

Industry Leaders: Driving Economies of Scale

For industry actors, participation in LRM is often framed as voluntary goodwill. In practice, engagement is a function of economics: when recovery is happening at meaningful scale, when logistics networks exist for aggregating refrigerants, and when the commercial case for reclamation or certified destruction is clear, industry actors have both the incentive and the infrastructure to participate.

When investment materializes, the impact goes beyond capital. An OEM that requires verified refrigerant recovery as a condition of warranty service changes technician behavior at scale. A distributor that builds take-back infrastructure into refrigerant sales operations creates a structural return pathway that does not depend on technician initiative or carbon credit prices.

Policy: Codifying What Markets Demonstrate

Voluntary climate finance and compliance carbon market mechanisms can build operational foundations, but without a policy framework that embeds LRM as a legal and institutional norm, those foundations remain dependent on external finance and private initiative.

This is where carbon finance has a distinct and time-limited role to play: absorbing some initial infrastructure buildout costs while policy frameworks are being constructed and resourced. Carbon finance can function as a bridge rather than a permanent substitute.

Policy defines the endgame: a well-designed regulatory framework eventually reduces reliance on carbon finance and establishes LRM as a durable part of national cooling infrastructure.

Cascade's 2026 Roadmap: Testing the Theory in Practice

Ensuring a Foundation of High-Quality, Fit-for-Purpose Voluntary LRM Methodologies

As methodologies for HFC destruction in Article 5 countries evolve, the field faces a foundational challenge: proving that these first projects deliver verifiable climate impacts and avoid unintended outcomes.

Cascade is actively engaged in this methodology development process, including convening cross-sector workshops and contributing feedback on methodology drafts under review.

Demand and Supply Aggregation for Initial Catalytic Voluntary Transactions

Cascade is working to connect motivated voluntary buyers with early-stage LRM projects in the Global South, including priority countries in Southeast Asia. The goal is to generate not only credits but also high-quality data and operational proof points needed to support transition into compliance systems.

Engaging Compliance Market Buyers and Industry Value Chain Leaders

Cascade is building relationships with sovereign compliance buyers and engaging project developers, HVAC OEMs, and chemical distributors to align around high-integrity rulesets and operational readiness.

Supporting Effective Policies

Cascade's policy analysis and engagement runs in parallel with voluntary and compliance market work, with a focus on understanding enabling conditions for LRM policy in priority Southeast Asian countries and identifying concessional finance opportunities where carbon markets are not the right fit.

Conclusion

Cascade's theory of change is that different financing mechanisms are needed at different stages of LRM market development to accelerate impact. Voluntary pilots can prove out the model, compliance markets can scale it, industry investment can further help build infrastructure and demand, and policy can institutionalize LRM practices.

We believe that the HFC lifecycle management problem is addressable. If you are a stakeholder interested in accelerating the LRM transition in developing countries, particularly in Southeast Asia, please reach out at [email protected].