1 st DRAFT CONCEPT DOCUMENT:

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1 1 st DRAFT CONCEPT DOCUMENT: AMENDMENT OF THE REGULATIONS REGARDING THE PHASE- OUT AND MANAGEMENT OF OZONE DEPLETING SUBSTANCES June 2016 Page 1 of 11

2 TABLE OF CONTENT Page 1.INTRODUCTION BACKGROUND IMPORT/EXPORT (TRADE IN THE COUNTRY) PROBLEM STATEMENT/GAPS... Error! Bookmark not defined. 5.OBJECTIVE(S) CONTENTS/AMENDMENTS REGULATORY FRAMEWORK COMPLIANCE MONITORING SOCIO ECONOMIC IMPACT ASSESSMNET STUDY RECOMMENDATIONS AND CONCLUSIONS List of graph ODS CONSUMPTION FROM 2005 TO Page 2 of 11

3 Acronyms and abbreviations AC CFC CFM CP CPR DC FCU GWP HC HCFC HFC HP ID IDU LP MLF MP NCG NPT ODP ODS RAC R&R RRR RTK TT UV UNEP Air Conditioning Chlorofluorocarbon Cubic Feet per Minute Copper Phosphorus Constant Pressure Regulator Direct Current Fan Coil Unit (indoor) Global Warming Potential Hydrocarbon Hydrochlorofluorocarbon Hydrofluorocarbon High Pressure Inside diameter Indoor Unit Low Pressure Multilateral Fund for the implementation of the Montreal Protocol Non-Condensable Gas National Pipe Thread Ozone Depleting Potential Ozone-Depleting Substances Refrigeration and Air Conditioning Recovery and Recycling Recovery, Recycling and Reclamation Retrofit Test Kit Tubing Tools Ultraviolet United Nations Environment Programme Page 3 of 11

4 1. INTRODUCTION South Africa is party to the Vienna Convention for the protection of Ozone Layer and the Montreal Protocol on Substances that deplete the ozone layer. The Montreal Protocol (herein referred to as the Protocol) requires that parties set out control measures for the phase-out or reduction of ozone depleting substances. Ozone depleting substances (ODSs) with high ozone depleting potential have more stringent phase-out target dates, e.g. the phase-out target for Methyl Bromide was 2015 and for Hydrochlorofluorocarbons (HCFCs) is 2040 with annual consumption percentage reductions from 2009/10. HCFCs are ODSs that deplete the ozone layer that are widely used in refrigeration and air conditioning, foam blowing and solvent applications. Action on HCFCs is important in that these chemicals have an impact on both ozone depletion and climate change. In terms of direct impact, the most commonly-used HCFCs have ozone depleting potentials (ODPs) ranging from 0.02 (HCFC-123) to 0.11 (HCFC-141b) and global warming potentials (GWPs) ranging from 76 (HCFC- 123) to 2270 (HCFC-142b). Equipment can also indirectly contribute to the emission of (Greenhouse gasses) GHGs through its consumption of energy. Prior to CFC phase-out (1 January 2010) the refrigeration and air conditioning (RAC) sector was the biggest consumer of CFCs, and today the sector has become one of the primary consumers HCFCs. HCFCs should be completely phase-out from non-essential use by 1 January Many countries recognized that increasing their consumption of HCFCs is building an HCFC-based infrastructure that creates a future servicing demand, while the supply of HCFCs is being gradually decreased through a national quota system, and supply is expected decrease over time. Therefore the installation of such equipment, while slightly higher in cost, will lead to additional energy savings in the long run. Page 4 of 11

5 2. BACKGROUND To ensure full phase-out of ODSs, South Africa has developed the Regulations Regarding the Phasing-out and Management of Ozone-Depleting Substances, Regulation 351 of 8 May 2014.This regulation was promulgated by the Minister of the Department of Environmental Affairs (DEA) to monitor and control consumption of ODS s in the country. The International Trade Administration Commission (ITAC) issues a permit upon recommendation by the DEA National Ozone Unit (NOU). The Department of Agriculture, Forestry & Fisheries (DAFF), the NOU and ITAC work together for importation of methyl bromide and issuance of permit(s). In addition, SARS Customs and Excise have allocated tariff codes to identify ODSs. These tariff codes are used by NOU for recommendations to ITAC and when issuing import and export permits. Therefore, by controlling and monitoring the imports into the country ODS s consumption is expected to decrease. Among other things the current Regulations provide the phase-out schedule for HCFCs with different target dates. To better facilitate this, in 2013, DEA has allocated HCFC import quotas to all importers (about 19 companies) of pure and blended HCFCs. With quota allocation, companies can only import limited or allocated quantities of HCFCs whether in pure or blended form. 3. PROBLEM STATEMENT/GAPS ODS Regulations are not referencing to relevant regulations that control refrigerants in the country e.g. Import and Export Regulations, 2012 from the Trade Administration Commission, Economic Development Department. Hence alignment and ensuring harmonisation of the relevant regulations needs to be considered through the Amendment of the ODS Regulations. The Amendment should seek to close the gap of importing/exporting blended ODSs without. The current ODS Regulations does not make provisions for controlled HCFC Import quotas for a company to import HCFCs as pure substances or as component of blended substances. Though the Regulations provides schedule for phasing out HCFCs, quota allocations needs to be considered for inclusion. Page 5 of 11

6 Currently ITAC has a regulation that requires all importers of ODSs and their alternatives to have import Permits, however there are companies who go ahead and import this substances without a Permit. ITAC, however as mentioned above only issues import and export permit for a substance only upon receipt of recommendation from DEA (without DEA recommendation ITAC will issue neither an import nor export Permit).Therefore Recommendations issued by the DEA need to be considered for inclusion in the Amendment of the Regulations.. 4. OBJECTIVE(S) To amend ODS Regulations to give effect to some provisions that are currently not included in the current Regulations. To ensure alignment and harmonisation with other relevant existing regulations that control ODSs in the country To ensure effective enforcement of the provisions of the Regulations through addressing of among others HCFC Import quotas, HCFC Import and Export Recommendations by DEA to ITAC and alignment of permitting provisions to the Import/Export Regulations, 2012 with ODS Regulations 5. IMPORT/EXPORT (TRADE IN THE COUNTRY) South Africa does not produce ODSs within the country however all these refrigerants are imported into the country and exported out to other countries. The import of these refrigerants comes in through customs ports of entries and they also exit the country via the ports and/or boarders. For this reason consumption within the country is then calculated as follows; Consumption = Import - Export The table and a graph below shows ODS consumption trends whereas the following are the ODSs imported and exported from 2005 to Page 6 of 11

7 METRC TONNES HCFC-22 HCFC-123 HCFC-124 HCFC-133a HCFC-141b (Noting that R-141B in pure and blended form is banned from imports as from 1 January 2016) HCFC-142b ODS Consumption from 2005 to HCFC CONSUMPTION TREND YEAR Page 7 of 11

8 From the table and graph above consumption was at lowest in 2005 as Metric tonnes (MT) has been reported. Consumption increased and was at the highest of MT in Between 2008 and 2012 consumption has been fluctuating and in 2013, there was a drop in the consumption to MT. In 2014 ODS consumption also dropped to MT and has again extremely drop in 2015 to thereof. This is a result of controlling the ODSs consumption taking into consideration the 10% reduction milestone of the Protocol which is also provided in the ODS Regulation. 6. ODS REGULATION AMENDMENT/REVIEW The Amendment of the ODS regulation intends to cover the following. HCFC import quotas as allocated by the Department in December Recommendations from DEA Alignment or referencing with Import and Export Regulations, 2012 from ITAC Alignment or referencing with Customs and Excise Act, 1964 (Act 91 of 1964) e.g. tariff related issues Alignment or referencing with SANS (pressurised equipment) 7. OZONE DEPLETING SUBSTANCES REGULATORY FRAMEWORK Regulations regarding the phase-out and management of the ozone depleting substances are: Regulations Regarding the Phasing-out and Management of Ozone Depleting Substances in terms of the National Environmental Management Air Quality Act, NEM: AQA (Act No. 39 of 2004), 8 May Import Control Regulations, 2012 in terms of International Trade Administration Commission Act, (Act 71 of 2002) Export Control Regulations, 2012 in terms of International Trade Administration Commission Act, (Act 71 of 2002) Occupational Health & Safety Act: Driven Machinery: Clause 15 Page 8 of 11

9 PER (Pressure Equipment Regulations) R734 of July 2009 SANS of 2014 (Rev-5) - Refrigerating Systems including plants associated with Air Conditioning The amendment of the Regulations will be done in accordance with: Section 55 (3)(a) before publishing any regulation made in terms of this Act, or any amendment to the regulations, the Minister or MEC must follow a consultative process in accordance with sections 56 and COMPLIANCE MONITORING In an effort to monitor and control the consumption of ODSs in the country, the DEA Compliance Monitoring Unit together with ITAC, DoL and DAFF Inspectors have collaborated to undertake the task of ensuring compliance with ODS Regulations and other relevant laws pertaining to refrigerants (i.e. ODSs). The amendment of the Regulation will enable effective enforceability and compliance monitoring of the ODS Regulations. Furthermore South Africa will continue to meet its obligations under the Montreal Protocol. 9. SOCIO ECONOMIC IMPACT ASSESSMNET STUDY In South Africa, Cabinet decided on the need for a consistent assessment of the socio-economic impact of policy initiatives, legislation and regulations in February The approval followed a study commissioned by the Presidency and the National Treasury in response to concerns about the failure in some cases to understand the full costs of regulations and especially the impact on the economy. To implement the Cabinet decision, from 1 October 2015 Cabinet Memoranda seeking approval for draft policies, Bills or regulations must include an impact assessment that has been signed off Page 9 of 11

10 by the SEIAS Unit. Cabinet Memoranda have been reviewed for departments to include information generated by the SEIAS in the recommendations. The implementation of SEIAS is overseen by an Interdepartmental Steering Committee made up of Senior Officials of the Presidency (Cabinet Office), DPME, Economic Development Department, National Treasury, Department of Trade and Industry, Department of Environmental Affairs, Department of Labour, Department of Public Service and Administration, Department of Social Development, State Security and the Chief State Law Advisors. The Steering Committee is intended to provide guidance and support and to oversee the implementation of SEIAS. DPME is responsible for the establishment of a SEIAS unit to ensure the implementation, quality control and capacity support for SEIAS across government. SEIAS aims at: Minimising unintended consequences from policy initiatives, regulations and legislation, including unnecessary costs from implementation and compliance as well as from unanticipated outcomes. Anticipating implementation risks and encourage measures to mitigate them. For the proposed Amendments for the Regulations Regarding the Phase-out and Management of Ozone Depleting Substances SEIAS will be undertaken to determine the costs and benefits of the amendments of the Regulation. 10. RECOMMENDATIONS AND CONCLUSIONS It is recommended that the current Regulations Regarding the Phase-out and Management of Ozone Depleting Substances be amended in order to address identified gaps. The proposed amendments will ensure better management of ODSs and better facilitation of ODS phase-out. The amendment of the current Regulations will be done in consultation with relevant stakeholders. Page 10 of 11

11 The SEIAS process has commenced to determine the cost and benefits of the proposed amendments. Page 11 of 11