North American Proposal for Phasing Down HFCs under the Montreal Protocol

1. North American Proposal for Phasing Down HFCs under the Montreal Protocol Presentation by Canada, Mexico and the United States Main Meeting of Ozone Action Networks from Latin America and the Caribbean Trinidad and Tobago October 4-7, 2011

2. Scope of Presentation Linkages between Ozone-Depleting Substances (ODS) and Hydrofluorocarbons (HFCs) Transition by Sectors Trilateral Amendment Proposal Overview Benefits Legal Aspects and Policy Rationale Financial Assistance under Montreal Protocol HFC-23 By-Product Emissions from HCFC-22 Production Questions and Comments

3. Relationship between ODS and Other Greenhouse Gases • Greenhouse Gases • Ozone Depleting Substances • (Halogen Gases) • HFCs • Halons • CO2 • HFC-23 • Methyl Chloride • (CH3Cl) • N2O • H-1301 • HFC-134a • H-1211 • HFC-125 • HCFCs • CH4 • Methyl Bromide • (CH3Br) • CFCs • Carbon Tetrachloride • (CCl4) • SF6 • PFCs • Methyl Chloroform • (CH3CCl3) • CFC-11 • CFC-12 • CFC-113

4. Many Safer ODS Substitutes Available, More on the Way “The ultimate choice of technology to phase out HCFCs will be based on ozone depletion and also climate impact, health, safety, affordability and availability, as Decision XIX/6 requires.” May 2010 Technology and Economic Assessment Panel (TEAP) Task Force Report : Assessment Of HCFCs and Environmentally-Sound Alternatives 2010 TEAP Progress Report • Substitutes for many sectors and sub-sectors available • Additional substitutes under development • Global acceptance for alternatives strengthening • Potential to skip higher-GWP HFC alternatives, go directly to lower-GWP alternatives

5. ODS Sectors Will Transition at Different Paces • Various factors influence speed of transition • Domestic and regional requirements • e.g., European F-Gas rule • Availability of alternatives • Advanced design options that reduce charge size • Global expansion of air conditioning and refrigeration • Proven technologies, ability to avoid multiple transitions • Opportunity to focus on sectors instead of chemicals • Examples follow

6. Potential Near-Term Transition: Motor Vehicle Air Conditioning Passenger Cars & Light-Duty Trucks: CO2 HFO HFC CFC HFO HFC Buses/Trains: HFC HCFC CFC CO2 1990s: CFCs to HFC/HCFCs Near future: CO2, HFOs, or lower-GWP HFCs

7. Available Options: Commercial Refrigeration Stand-Alone Equipment Condensing Unit Systems Multiplex Rack Systems CFCs/HCFCs->HFCs-> HCs/CO2 HCFCs->HFCs-> CO2, ammonia, HCs CFCs->HCFCs->Blends-> CO2, ammonia, HCs, HFOs

8. Changing Chemicals Not Only Option Advanced refrigeration system designs: • Distributed systems & indirect systems available • Distributed systems can lower refrigerant charge by 30–50% • Indirect systems can lower refrigerant charge by 50–80% • Europe: indirect systems are norm • U.S.: distributed systems ~40% of new installations and indirect systems are gaining significant market share Supermarkets can reduce HFC use by changing system designs

9. Available & Near-Term Options: Unitary A/C Alternatives to R-407C & R-410A: - lower-GWP HFCs, e.g., HFC-32 - HCs and CO2 - potentially HFOs, blends HFC HFCs HCFC HC CO2 HCFCs transitioning to HFCs Near future: CO2, HFOs, or lower-GWP HFCs

10. Projected HFC Growth: PNAS, 2009, Velders, et al U.S. EPA, 2009 HFC growth linked to ODS phaseout, expanding availability of air conditioning & refrigeration

11. Current Measures on HFCs under the UNFCCC • HFCs are one of six greenhouse gases controlled under the UNFCCC • However, targeted measures on this group of gases are not required under the UNFCCC • The CDM issues international offset credits to approved projects that destroy HFC-23 in developing countries, but such projects are voluntary • Projects that earn credits are in developing countries and are voluntary

12. 2011 Trilateral Amendment Proposal Canada, Mexico & United States Proposed Addressing HFC Production and Consumption Phasedown, not Phaseout of HFCs • Phases Down to 15% of Baseline, GWP-weighted 2011 proposal includes new HFC baselines: • Non-Article 5 Parties: average 2005-2008 HFC plus 85% of HCFC consumption/production • Article 5 Parties: average 2005-2008 HCFC consumption/production Covers 20 HFCs, including 2 known as HFOs Limits by-product emissions of HFC-23 Complements but leaves unchanged UNFCCC obligations Approach is consistent with our supported approach to address aviation and maritime bunker emissions in ICAO and IMO

13. Trilateral Proposal Phasedown Schedule (MP designations)

14. Substantial Climate Benefits Possible Trilateral Proposal global cumulative benefits: • ~3,000 MtCO2eq through 2020 • Developed country Parties = 3,000 MtCO2eq • Developing country Parties = 150 MtCO2eq • ~88,000 MtCO2eq through 2050 • Developed country 5 Parties = 43,000 MtCO2eq • Developing country Parties = 45,000 MtCO2eq • ~ 11,600 MtCO2eq through 2050 from HFC-23 byproduct emissions controls

15. Trilateral Proposal Benefits in Context consumption reductions emission reductions emissions MMTCO2eq

16. Montreal Protocol History: Considers HFCs and Other ODS Substitutes • Given HFC growth stems from ODS phaseout, Montreal Protocol has special responsibility to address HFCs • Long history of concern: • Decision X/16 (1998): convened workshop with UNFCCC, establishing information on HFCs & PFCs, ways to limit emissions • Decision XIV/10 (2002): TEAP collaborates with IPCC to develop report: Safeguarding the Ozone Layer and the Global Climate System; Issues Related to HFCs and PFCs • Decision XX/8 (2008): report and workshop on high-GWP alternatives to ODS, principally HFCs • ExCom Decision 60/44 (2010): allows 25% funding increment, above cost-effectiveness thresholds, when needed for climate benefits, mainly to avoid high-GWP HFCs

17. Moving Beyond Concern, Taking Action for Safer ODS Phaseout • Historically, Montreal Protocol has not controlled HFCs, but has taken steps to develop information and understanding on HFC use & emissions at global level • Montreal Protocol built world’s widest body of experience and expertise on sectors using HFCs • Vienna Convention Article 2 provides scope • HFCs create adverse effects as a result of ozone layer protection, so harmonizing approaches reduces overall impacts • Therefore, it is appropriate and incumbent on Montreal Protocol to take action on HFCs in collaboration with UNFCCC • Atmosphere will not care about the forum: Montreal Protocol, UNFCCC, or both together

18. Financial Assistance for Transition • Ensure timely financial assistance through Montreal Protocol’s Multilateral Fund (MLF) to address HFCs beforehuge growth occurs • Longer we wait, more difficult and costly to transition sectors to low-GWP substitutes • Waiting increases damage to climate system • Effective incremental cost model of MLF can address HFCs used as ODS substitutes • Proposal allows short-term HFC growth to replace ODS when no other cost-effective alternatives are available • Developing countries are provided with a significant grace period to comply with proposed control measures • Recognizes short-term focus must be on ODS phase-out

19. HFC-23 By-Product Emissions Background: • HFC-23 is a by-product of producing HCFC-22 • HFC-23 has highest GWP of all HFCs • HFC-23 emissions controlled under the CDM are decreasing, but uncontrolled HFC-23 emissions are increasing in developing countries (Montzka, et al) • CDM projects cover <50% HFC-23 emissions in developing countries Proposal would control 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

20. Proposed Separate Decision on HFC-23 By-Product Emissions Recognized HFC emissions covered by Kyoto Protocol to UNFCCC Requested Executive Committee of MLF to: • Update information on HCFC-22 facilities, including whether CDM-covered • Formulate funding guidelines for un-covered facilities • Approve funding for implementation of projects to reduce HFC-23 by-product emissions

21. Summary Suite of known alternatives, technologies, and better handling can significantly reduce HFC consumption in near and long term Considering ODS and HFCs together allows for focus on sectors, rather than chemicals HFC amendment proposals provide meaningful real opportunities for near-term climate benefits Montreal Protocol appropriate vehicle HFCs use tied to ODS phaseout Successful experience Effective financial mechanism Sector expertise