HFC Phasedown Under the Montreal Protocol

OZONACTION NETWORK FOR LATIN AMERICA AND THE CARIBBEAN

OCTOBER 6-8 2010 Mexico, D.F.

Canada, Mexico and The United States

Scope of Presentation

• Trilateral Amendment Proposal Overview• Legal Aspects• Policy Rationale• Comparisons • Benefits• Financial Assistance • Path Forward• HFC-23 By-Product Emissions From HCFC-22

Production• Questions and Comments

Trilateral Amendment Proposal• Canada, Mexico & United States Proposal

– Phasedown, not Phaseout of HFCs • Phases Down to 15% of Baseline

– Phasedown is GWP-Weighted– Covers 20 HFCs, Including 2 known as HFOs– Limits By-Product Emissions of HFC-23– Leaves UNFCCC Obligations Unchanged

• Supports Global Efforts to Reduce GHGs

– MLF eligibility for Production & Consumption and HFC-23 By-Product Reductions

Montreal Protocol has Mandate with respect to HFCs

• Vienna Convention Article 2 provides scope to address HFCs– HFCs result in adverse effects resulting from ozone layer

protection, so Parties can harmonize approaches to reduce impacts

• Trilateral HFC proposal includes provisions confirming obligations relating to HFC emissions continue unchanged under UNFCCC/Kyoto Protocol– Complements but does not replace existing UNFCCC

obligations– Addresses consumption and production to assist in

reductions of emissions– Similar to aviation and maritime bunker emissions to be

addressed by ICAO and IMO

Mandate of Montreal Protocol with Respect to HFCs: Policy Aspects (1)

• Given HFC growth results from ODS phaseout, Montreal Protocol has special responsibility to address HFCs

• Montreal Protocol has long history of concern with HFCs:– MOP Decision X/16 (1998): convened workshop, in collaboration

with UNFCCC, with view to assisting establishment of information on HFCs and PFCs and potential ways to limit their emissions

– MOP Decision XIV/10 (2002): called on TEAP to collaborate with IPCC to develop report: Safeguarding the Ozone Layer and the Global Climate System; Issues Related to HFCs and PFCs

– MOP Decision XX/8 (2008): called for report and workshop on high-GWP alternatives, principally HFCs, to ODS

– ExCom Decision 60/44 (2010): allows for 25% funding increment, above cost-effectiveness thresholds, when needed for climate benefits, mainly to avoid selection of high-GWP HFCs

Mandate of Montreal Protocol with Respect to HFCs: Policy Aspects (2)

• While Montreal Protocol has not controlled HFCs, historically, it has taken key steps developing information and understanding on HFC use and emissions at global level

• Montreal Protocol has built world’s widest body of experience and expertise on sectors using HFCs

• Therefore, it is not only appropriate, but incumbent on Montreal Protocol to take action on HFCs– In collaboration with UNFCCC/Kyoto Protocol

• Ultimately, atmosphere will not care if HFCs have been reduced through Montreal Protocol, UNFCCC/Kyoto Protocol or both

Trilateral Proposal Phasedown Schedule

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2020 2025 2030 2035 2040 2045 2050Years

Ca

p -

Pe

rce

nt

of

Ba

se

lin

e

Non-A5 Reduction Steps

A5 Reduction Steps

90% 90%

70% 70%

80%80%

50%50%

30%30%

15%15%

Federated States of Micronesia HFC Amendment Proposal: Differences

• A5 Country baseline established with different methodology – Article 5 average 2007-2009 HCFC

• Schedule differs– Reductions every 3 years until 2028, then plateau

established in 2030– Plateaus at 10% of baseline – Includes by-product control provisions starting in

2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2020 2025 2030 2035 2040 2045 2050

Cap

- P

erce

nt

of

Bas

elin

e

Canada, Mexico & United States (Non-A5)

Canada, Mexico & United States (A5)

Federated States of Micronesia (Non-A5)

Federated States of Micronesia (A5)*

* Baseline = Average HCFC Consumption, 2007-2009 (all others Average HCFC+HFC, 2004-2006)

90%

80%

70%

50%

30%

15%

90%

80%

70%

50%

30%

15%

85%

70%

55%

45%

30%

15%

10%

85%

70%

55%

45%

30%

15%

10%

Proposed HFC Reduction Steps for Article 5 and Non-Article 5 Countries

Overview of HFC Proposals

Trilateral Proposal Micronesia ProposalNon-A5 Schedule A5 Schedule Non-A5 Schedule A5 Schedule

Year Cap Year Cap Year Cap Year Cap

2014 90% 2017 90% 2013 85% 2019 85%

2017 80% 2021 80% 2016 70% 2022 70%

2020 70% 2025 70% 2019 55% 2025 55%

2025 50% 2029 50% 2022 45% 2028 45%

2029 30% 2035 30% 2025 30% 2031 30%

2033 15% 2043 15% 2028 15% 2034 15%

Plateau 15% Plateau 15%2030 10% 2036 10%

Plateau 10% Plateau 10%

Non-A5 Baseline A5 Baseline Non-A5 Baseline A5 Baseline

HFC+HCFC from 2004-2006

HFC+HCFC from 2004-2006

HFC+HCFC from 2004-2006

HCFC from

2007-2009

HC

FC

HF

C

-

200

400

600

800

1,000

1,200

BASE-LINE

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

YEAR

MM

TC

O2E

HCFC Consumption HFC Consumption HFC BENEFITS

HFC Projected Consumption North American Proposed Schedule

First Effective Year of

Consumption Cap

2010

90% of Baseline80% of Baseline

Projected HFC Consumption

Climate Benefits

First Compliance Obligation

2014

Non-Article 5 Parties Estimated HFC Consumption & Benefits from Phase Down

HF

C

HC

FC

-

100

200

300

400

500

600

700

800

900

BASE-LINE

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

YEAR

MM

TC

O2

E

HFC Consumption HCFC Consumption

HFC Projected Consumption Linear (Step Down Schedule)North American Proposed Schedule

Projected HFC Consumption

90% of Baseline

First Compliance Obligation

2017

First Effective Year of

Consumption Cap

2018

Estimated First Effective Year of Proposed Phase Down for Article 5 Parties

Substantial Climate Benefits• Global Trilateral Proposal Cumulative Benefits:

– ~3,000 MMTCO2eq* through 2020

• Non-Article 5 Parties = 3,000 MMTCO2eq

• Article 5 Parties = 150 MMTCO2eq

– ~88,000 MMTCO2eq through 2050

• Non-Article 5 Parties = 43,000 MMTCO2eq

• Article 5 Parties = 45,000 MMTCO2eq

• FSM Proposal cumulative benefits:– ~4,000 MMTCO2eq through 2020

– ~93,000 MMTCO2eq through 2050

• EPA’s Analysis of HFC Production and Consumption Controls:http://www.epa.gov/ozone/downloads/Analysis_of_HFC_Production_and_Consumption_Controls.pdf

*MtCO2eq

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

North AmericanProposal (2014-

2050)

MicronesiaProposal (2013-

2050)

MontrealProtocol (1990-

2010)

AcceleratedHCFC Phaseout

(2010-2039)

Kyoto Protocol(2008-2012)

CopenhagenAccord (2012-

2020)

Annex IEmissions in

2007

consumptionreductions emission reductions emissions

Trilateral Proposal Benefits in Context

MM

TC

O2e

q

Financial Assistance to Article 5 Parties • Ensure timely financial assistance through MLF to address

HFCs before huge growth takes place– Waiting longer makes it more difficult and costly to phase down

HFCs see HCFC challenge– Waiting also increases damage to climate system

• Effective incremental cost model of MLF can address HFCs– Many countries indicated preference for MLF model in various

international environmental forums and negotiations• Allows short-term HFC growth to replace HCFCs when no

other cost-effective alternatives are available • Most Article 5 countries would not actually need to reduce

HFC consumption or production until 2018 at earliest– Recognizes short-term focus must be on HCFC phase-out

HFC-23 By-Product Emissions• Background:

– HFC-23 is a by-product of producing HCFC-22– HFC-23 has highest GWP of all HFCs– Controlled HFC-23 emissions are decreasing but uncontrolled

HFC-23 emissions are increasing, in Article 5 Countries (Montzka, et al)

– CDM projects cover <50% HFC-23 emissions in Article 5 Parties

• Amendment Controls By-Product Emissions– Covers Emissions from HCFC-22 Production Facilities– Makes By-Product Obligations Eligible for MLF Funding

• Would cover facilities not covered by CDM

– Additional Benefits from HFC-23 Mitigation ~6,000 MMTCO2eq by 2050

Separate Decision on HFC-23 By-Product Emissions

• Recognizes HFC emissions covered by Kyoto Protocol to UNFCCC

• Requests ExCom of MLF to:– Update Information on Article 5 HCFC-22 Facilities,

Including whether CDM-Covered– Develop Capital & Operational Cost Estimates– Formulate Guidelines by 64th ExCom Meeting– Facilitate Implementation of Projects

• Request TEAP/SAP to:– Study Costs and Environmental Benefits

Summary

• HFC amendment proposals provide meaningful real opportunities for near-term climate benefits

• Montreal Protocol appropriate vehicle for HFC Phasedown amendment – Successful experience– Effective financial mechanism– Sector expertise– HFCs used tied to ODS phaseout