Looking Ahead: HCFCs, HFC, CTC and other Chemicals Addressing HCFC, CFC and HFC in a Package: World Bank and GEF Cooperation

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1 Looking Ahead: HCFCs, HFC, CTC and other Chemicals Addressing HCFC, CFC and HFC in a Package: World Bank and GEF Cooperation Steve Gorman Ninth Annual Financial Agents Workshop The World Bank Washington, D.C. March 31 - April 1, 2005

2 Introduction Destruction of the stratospheric ozone layer is caused by emission of CFCs and other chemicals like halons, hydrochlorofluorocarbons (HCFCs), methyl chloroform, carbon tetrachloride, and methyl bromide; Montreal Protocol established phaseout dates for all the above ozone depleting substances by 2010 for CFCs, Halons, and carbon tetrachloride, 2015 for methyl chloroform and methyl bromide, and 2040 for HCFCs;

3 Background Kyoto Protocol (1997) entails requirements for reducing greenhouse gases by member states with mandatory targets for developed nations. Major greenhouse gases addressed by Kyoto Protocol are, among others, carbon dioxide, methane, and nitrous oxide. CFCs, HCFCs, halons, methyl chloroform, and carbon tetrachloride, controlled by Montreal Protocol, are greenhouse gases with high GWP. These chemicals are not addressed by the Kyoto Protocol. Most ODS, except HCFCs, will be phased out by the next decade.

4 Threats HCFCs could pose directly or indirectly burden on the GHG loading as the consumption of these chemicals increase substantially in developing countries. HCFCs are high GWP gases; Production of these chemicals could generate by-products that have adverse effect on the global climate.

5 Chemical Atmospheric lifetime (Yr) ODP GWP CFC ,680 CFC ,720 CFC ,030 CFC ,880 CFC-115 1, ,250

6 Chemical Atmospheric lifetime (Yr) ODP GWP Halon ,860 Halon ,030 Halon ,620 CTC ,380 TCA MBr

7 Chemical Atmospheric lifetime (Yr) ODP GWP HCFC HCFC ,700 HCFC HCFC HCFC-141b HCFC-142b ,400

8 Chemical Atmospheric lifetime (Yr) ODP GWP HFC ,000 HFC HFC-134a ,300 HFC-152a HFC-227ea ,500 HFC-245fa HFC-365mfc

9 Issues for consideration Global environmental impact of HCFC phaseout under the Montreal Protocol regime taking into account contribution of such phaseout to the global effort in reducing emissions of global warming gases. Impact of continuing consumption and production of certain HCFCs as production of such chemicals could lead to generation of global warming byproducts.

10 Issues for consideration Cost-benefit of various HCFC phase-out scenarios to the global environment; Cost effective measures to properly manage by-products of the production of HCFCs and the increasing stockpile of unwanted CFCs due to retirement of outdated CFC technologies.

11 Present Situations and Future Uncertainties HCFCs are used in the refrigeration and insulation foam sectors; EU and some developed nations have adopted an accelerated phase-out of HCFCs. This could lead to a decrease in supply from these countries through closure of some existing facilities; It raises potential of restriction of imports of products made-with or containing HCFCs.

12 Present Situations and Future Uncertainties Consumption of HCFCs in certain developing countries (China, India, Brazil, and others) where population concentrations and economic growth rates are high, is expected to increase substantially. Decline in demand for HCFC-22 in Western Europe and Japan will be offset by growth in China and other developing countries.

13 Present Situations and Future Uncertainties Total production of HCFC-22 will depend on a balance of declining consumption in developed countries, increasing consumption in developing countries and global increase in feedstock demand for the production of fluoropolymers. Concerns that provision of the Protocol allowing long-term consumption of HCFCs may be irrelevant in practice because of the potential lack of availability, and/or unaffordable prices of HCFCs.

14 Present Situations and Future Uncertainties Possible insufficient installed capacity for HCFC-22 production beyond 2005; Market of HCFC-22 could be tight from 2005 due to 2004 production freeze in developed countries and additional unilateral controls in EU in 2008 and 2014; Variable Further investment in HCFC-22 production facilities in developing countries before 2010.

15 Challenges Formulate appropriate policies in response of actions taken in developed countries and uncertainties mentioned previously. Policy options could include accelerated phase-out of HCFC consumption or to become self-reliance by investing in establishment or expansion of HCFC production facilities.

16 Challenges Early Phase-out: Safe and environmentally-friendly alternatives to HCFCs in the foam and refrigeration sectors are commercially available and affordable; Benefits of alternatives in terms of energy efficiency in case of replacing HCFC-22 with HC should be taken into account.

17 Challenges Expansion of HCFC Production Facilities Other global environmental impact should be considered: Increasing production of HCFC-22 will lead to additional production of CTC whose demand is declining rapidly due to the Protocol; Increasing production of HCFC-22 generates HFC-23 as a by-product or co-product. Demand of HFC-23 is on the decline as well. HFC-23 is not harmful to the ozone layer but it has a GWP value of 12,000 versus carbon dioxide.

18 Challenges Continuing and increasing use of HCFC-22 as feedstock for production of fluoropolymers is not controlled by the Montreal Protocol; Given the recent finding of harmful effects of fluoropolymers, the future of these products is uncertain.

19 Challenges Unwanted stockpile of ODS CFC-11 from retirement of CFC chillers; CTC from production of chloroform as raw materials for production of HCFC-22; HFC-23 from production of HCFC-22; Integrated approach in dealing with these chemicals and chemicals controlled by other conventions.