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Unchartered Territory: Funding Climate Action During a Pandemic

Unchartered Territory: Funding Ozone and Climate Protection During a Pandemic

This week, Parties to the Montreal Protocol, renowned as the world’s most successful environmental treaty, came together remotely for their annual intersessional meeting, known as the Open-ended Working Group (OEWG). The Montreal Protocol has a vital role to play in addressing climate change, as it becomes increasingly clear that we currently are not on the pathway to limit global temperature rise to below 1.5 °C.

Given these unprecedented times, the meeting was moved online from its original location in Montreal, Canada, with delegates instead meeting virtually across many time zones. Unfortunately, this meant limited bandwidth for discussions on a range of important issues. For this reason, the online meeting of the 42nd OEWG focused almost solely on the upcoming replenishment of the Multilateral Fund, the financial arm of the Montreal Protocol. The Montreal Protocol’s Technology and Economic Assessment Panel (TEAP) task force prepared a report in advance of this meeting, estimating the range of figures necessary for the replenishment of the Fund for the next triennium 2021–2023 using various assumptions and models. Read EIA’s detailed comments on the Report here.

Important agenda items that were unable to be fully discussed, include the interconnected issues of unexpected CFC-11 and HFC-23 emissions and overdue reforms to the Montreal Protocol implementation mechanisms and institutions. These issues still made their presence felt in the context of conversations on funding, referenced in arguments calling for a strong replenishment that allows for continued success of this vital treaty.

Key Points of Discussion at OEWG-42 Online Technical Sessions

The online sessions held this week focused on the technicalities of the Replenishment Report produced by the Technical and Economic Assessment Panel (TEAP). During the course of these discussions, several small island countries, such as Grenada and Trinidad and Tobago, emphasized the need for inclusion of costs related to responsible disposal in the amounts being considered to be funded. Germany and Colombia made the critical point about COVID-19 affecting implementation of all actions and the need for resources to be maximized to reach the ambition agreed to under the Montreal Protocol. Many Article 5 (A5) parties (developing countries), have argued for greater funding to expedite the HCFC phase-out and to enable whole sectors to leapfrog the use of HFCs; parties also asked TEAP to estimate the replenishment amount needed if A5 parties could leapfrog old technologies at the same pace as non-A5 parties.

Several countries touched on different aspects connecting the replenishment with strengthening A5 Parties’ capacity to successfully implement commitments. Norway raised important points about institutional strengthening and also linkages between institutional strengthening and verification of ongoing and finalized projects. Nigeria raised the point of whether and what specific provisions are being made to strengthen Montreal Protocol institutions and prevent illegal production and trade such as that of CFC-11.

US Domestic Picture

Meanwhile, back home in the United States, where the Kigali Amendment is yet to be ratified, 15 states have now enacted or are in the process of enacting new regulations or legislation tackling HFCs. Leading the way, California is expected to finalize new and more ambitious state level regulations by the end of this year adopting HFC bans similar to those in place in the European Union under its EU F-Gas law. These regulations will put a significant portion of the US market on a faster path to transitioning to low-GWP refrigerants in stationary refrigeration and supermarkets in particular. At the federal level, the American Innovation and Manufacturing (AIM) Act, domestic legislation to implement an HFC phase-down, underwent a virtual hearing in the Senate’s Environment and Public Works Committee earlier this year, but has yet to progress forward toward a vote despite broad bi-partisan support. Democratic presidential candidate Joe Biden’s climate plan indicates support for embracing ratification of the Kigali Amendment and a phase-down of HFCs, but contains few details on accompanying implementation or refrigerant management. Regardless of the outcome of the U.S. Presidential election this year, EIA continues to engage with climate leader states to identify opportunities for increasing domestic ambition in tackling HFCs and other F-gases, including on refrigerant management and end-of-life.

China Proposes Regulation to Phase Down HFCs, Strengthen Implementation

China the world's largest producer of these gases, is also yet to ratify the Kigali Amendment but proposed a new national plan to tackle HFCs in May 2020. The plan amends its existing regulations dealing with Ozone Depleting Substances (ODS) to cover HFCs and also to strengthen monitoring and enforcement of existing measures on all fluorinated gases. The plan proposes adding HFCs to existing regulations consistent with implementation of the Kigali Amendment, including a quota system that gradually reduces the production and consumption of HFCs for controlled uses such as refrigerants, foaming agents, fire extinguishing agents, solvents, cleaning agents, and aerosols. Aspects of strengthened implementation and enforcement contained in the proposed regulation are summarized here. Among others, it outlines plans for a comprehensive new system for automatic monitoring of production of controlled substances. EIA shared detailed comments with the Government of China on this draft regulation and will continue to engage closely in the follow up implementation.

China also announced one of the world’s most stringent energy efficiency requirements for room air conditioners this month. Starting July 1st 2020, new air conditioners and heat pumps (RACs) sold in China will need to be, on average, 15 percent more energy efficient. Although these regulations are applicable only to their domestic market, given China produces more than 70% of the world’s air conditioners it will have global impacts over time.

Building Back Better

Even though the two biggest producers and consumers of HFCs, U.S. and China have not ratified the Kigali Amendment, this week the total number of Parties that have, reached 100 with Liberia. As donor parties make critical funding decisions, it is important to remember that penny-pinching could discourage universal early participation and ratification.

As the world grapples with building back from the COVID-19 pandemic and related economic fallout, it is imperative that we build back better. The Parties to the Montreal Protocol must prioritize and financially support the protection of our ozone layer and climate this year. This replenishment is a crucial opportunity to maximize climate benefits of Montreal Protocol actions by laying a strong foundation for the implementation of the Kigali Amendment to phase-down HFCs and encouraging leapfrogging them altogether. Adopting a robust replenishment now will contribute to a faster and more cost-effective HFC phase-down overall. While replenishment constitutes the most “essential work” of this meeting, broader discussion of institutional reforms must also not be ignored. The success of the Montreal Protocol, and our ability to prevent catastrophic climate change, depend on it.

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