Why Phasing Down HFCs under the Montreal Protocol is Good for China and the Global Environment

At their recent summit in California, President Xi and President Obama agreed to work together and with other nations to address climate change by phasing down the production and consumption of hydrofluorocarbons (HFCs), a class of “super greenhouse gases” used widely in air conditioners and refrigeration, via multilateral mechanisms, including the use of the expertise and institution of the Montreal Protocol (see the official statement from China’s foreign ministry in Chinese and English). This is a big step for both countries. The Montreal Protocol is the most successful global environmental treaty, having saved the Earth’s ozone layer by phasing down the production and consumption of ozone-depleting CFCs and HCFCs, and by providing effective means of technology transfer and financial assistance. However, the HFCs that replaced CFCs and HCFCs, while not dangerous to the ozone layer, have extremely high global warming potentials (GWP)*—thousands of times more powerful than CO2 in warming the climate.  Their rapid growth in air conditioning, refrigeration, and other uses poses a huge challenge to efforts to avoid the most severe impacts of climate change.

By agreeing to phase down the production and consumption of HFCs in the Montreal Protocol, China and the US can lead efforts to develop climate friendly, safe alternatives to HFCs. By doing so, China will join more than 100 countries that have already signaled that they want to secure an agreement to phase down these chemicals under the Montreal Protocol. Doing so would not only have huge and immediate climate benefits, it would also have huge economic and environmental benefits for China’s government, its domestic industry, and its people. Reducing the production and consumption of these super greenhouse gases is in line with Chinese leaders’ calls to develop an eco-civilization based on resource conservation and environmental protection. It will also help key Chinese air conditioner manufacturers, such as Gree and Midea, which are already moving quickly to research and develop the next generation of air conditioners that will use lower-impact refrigerants, such as HC-290 and HFC-32, that are both ozone-friendly and climate-friendly.

Building on the US-China agreement to work on an HFC phase-down, we hope that the countries attending the Montreal Protocol meeting in Bangkok next week, including China, India, the U.S., and Europe, will agree to launch formal negotiations on an agreement to phase down HFCs under the Montreal Protocol. (The formal step is to create a “contact group” charged with negotiating the detailed control measures, financial arrangements, and other matters.)

A phase-down of these super greenhouse gases would benefit China in three important ways:

1. Transitioning to more climate-friendly refrigerants and coolants will help China address climate change, increase the global competitiveness of China’s manufacturers, and save money for Chinese consumers.

    The use of global warming HFCs is projected to grow significantly in the coming years as countries phase out ozone-depleting chemicals and as the use of air conditioners and refrigerators grow – especially in developing countries as these markets are expected to grow most quickly in coming years (see figure**). If left uncontrolled, global emissions of HFCs in 2050 are projected to be 28-45% of the emissions allowed under a global warming reduction pathway. China is the largest manufacturer and consumer of room air conditioners, manufacturing 110 million units in 2011, 70 million for the domestic market and 40 million for export. So if China makes the transition to chemicals with a lower impact on the climate, this would help it make an important contribution to addressing climate change and implementing its 12th Five Year Work Plan on Greenhouse Gas Emission Control which targets efforts to control HFC emissions

    China, as the largest producer of HFCs in the world and as a key manufacturer of residential, commercial and vehicle air conditioners and refrigeration equipment, has a key role to play in the transition to more climate-friendly alternatives. In China, most commercial and room air conditioners currently use HCFC-22, an ozone depleting refrigerant; as HCFC-22 is replaced under the Montreal Protocol, Chinese companies have been shifting to using HFC-410A, which, while not ozone depleting, has 2088 times the warming impact of CO2 and would have a powerful greenhouse gas impact if widely used.

    However, the Chinese room and commercial air conditioner industry is already actively looking for more climate-friendly alternatives to high GWP HFCs. More than half the companies making room air conditioners in China have chosen low-GWP HC-290 with financial assistance from the Montreal Protocol’s Multilateral Fund. By 2015, Chinese manufacturers will have retrofitted 18 production lines to produce the refrigerant HC-290, otherwise known as propane, and Chinese manufacturers such as Gree, Midea and GMCC already have HC-290 air conditioner manufacturing lines, with other manufacturers such as Haier and Hisense likely to follow. The implementation of a new national safety standard for heat pumps, air conditioners and dehumidifiers (GB4706.32-2012) as of May 1st this year, which details the safe application of HC-290 as a coolant, will help to assuage concerns about the safe use of propane as a coolant given its flammability, and ensure that Chinese air conditioner manufacturers produce products that are welcomed in the market and meet international safety standards and requirements.

    Chinese manufacturers are also looking to produce room air conditioners using HFC-32 (which has a relatively lower GWP of 675, as well as high efficiency), with Chinese manufacturers Gree and Midea already producing air conditioners that use HFC-32. By doing so, they will be maintaining their competitiveness with foreign manufacturers such as Japan’s Daikin, which will produce HFC-32 air conditioners for Japan and India, and Denmark’s Danfoss, which is working with Tsinghua University to research and develop HFC-32 air conditioners.

    For car air conditioners, Chinese manufacturers like other global car manufacturers, replaced HCFC coolants with HFC-134a, a coolant with a global warming impact 1400 times that of CO2. Globally, car companies are now switching to an HFC replacement called HFO-1234yf (GWP of about 4) and are researching the use of CO2 as a coolant, as regulations in Europe, the U.S., and Japan are requiring car manufacturers to use climate-friendly refrigerants.  In China, a partnership of Shanghai 3F New Materials Company and DuPont has built a plant in China to supply HFO-1234yf, so this replacement chemical should be widely available in China in the future.

    By switching to these more climate-friendly alternatives, Chinese coolant and equipment manufacturers will be better prepared for export to key markets such as the US, EU, India, Japan and Australia, which are requiring more climate-friendly alternatives to HFCs. As part of the greenhouse gas standards for cars in the U.S., carmakers are replacing HFCs with chemicals that have less than one percent of the climate impact. And a number of groups, including NRDC, are pushing for a broader phase-down in the U.S. under existing law. Similarly, the E.U. currently has a phase-out of high-GWP coolants for new cars through their “Mobile Air Conditioner Directive”. And the E.U. has proposed an “F-gas Directive” that will phase down all uses of HFCs by two-thirds from today’s levels, which is expected in the near future.

    Phasing down HFCs will also save Chinese consumers money, since the equipment developed to use the more climate-friendly alternatives will be based on more efficient designs; while they may require a slightly higher up-front cost, they will save money over the long term. By phasing down HFCs more quickly, Chinese consumers will be able to choose the most advanced air conditioners and save money.

    2. By going through the Montreal Protocol, China will be able to tap into the resources and technical assistance provided by the Montreal Protocol.

    The nearly 25 year history of the Montreal Protocol has successfully followed a model in which developed countries take the lead in phasing out chemicals harmful to the environment, and developing countries have differentiated commitments and receive financial and technical assistance to help with their phase-downs. The agreement between China and the US follows that model for an HFC phase-down under the Montreal Protocol and is consistent with two current phase-down proposals – the “North American proposal” (from the U.S., Mexico, and Canada) and the Federated States of Micronesia proposal. Both proposals contain features similar to previous phase-down rounds in the Montreal Protocol: (1) developed countries lead with the phase-down; (2) developing countries follow with a several year delay in their phase-down schedule; and (3) through a dedicated fund developed countries provide technical and financial support to help developing countries with the transition. The Montreal Protocol fund has delivered over the years – with more than $3 billion provided for the various chemical transitions, helping developing countries to more quickly phase out ozone-depleting chemicals.

    In contrast, trying to secure a similar agreement under the UN climate negotiations would be much more difficult. Funding under the climate negotiations will partly be utilized by the poorest countries and the most vulnerable – such as the large populations in Africa and the small island states that are on the front lines of climate change. China’s government and industry would be hard-pressed to compete with these vulnerable populations for resources in order to upgrade Chinese air conditioners and refrigerators. An agreement under the Montreal Protocol would unlock resources now for reducing production of global warming HFCs – countries such as China and India wouldn’t have to wait years for the mere possibility—much less certain—of funding coming through the climate negotiations.

    At the same time, the participants to the Montreal Protocol have the expertise and focus to dedicate to this issue, while the participants to the climate negotiations are busy trying to develop a new global climate agreement for 2015, and most of them have never dealt in detail with this class of chemicals. Delaying an agreement to phase down high-GWP HFCs means that Chinese companies could invest more heavily in the HFC industry, making an inevitable transition to lower-GWP refrigerants more expensive as they find themselves out-of-sync with global trends to use climate-friendly coolants. China’s government and its industry now have a huge opportunity to leapfrog to more advanced, climate friendly refrigerants. An agreement under the Montreal Protocol ensures that China gets the technical and financial assistance right now to help their companies make the inevitable transition away from high-GWP HFCs.

    3. Agreeing to phase down high-GWP HFCs under the Montreal Protocol will demonstrate China’s emergence as a leader on the international stage, one that can help address the climate problem even when other nations are stuck.

    Achieving success on the recently announced cooperation will build trust between the world’s two most important countries. Agreeing to work together on phasing down HFCs was one of only two concrete agreements reached at the meeting between these two leaders. In international relations – particularly between two powerful countries like China and the US – trust relies on two things. Countries must first reach agreement on how to solve issues that are at the top of their political agenda. Then they must ensure follow through on that agreement. In doing both, leaders gain trust that proves critical on future difficult issues. Following through on this agreement is an important trust-building exercise for the two countries.

    China’s efforts to phase down HFCs will also demonstrate leadership on an issue that has been stuck since 2009, when countries first formally proposed to phase down HFCs under the Montreal Protocol. Implementing the agreement will show that China can help implement solutions to address the growing threat of climate change, which is already having damaging consequences globally and within China. Reducing the production and use of super greenhouse gases such as HFCs will help stave off the most damaging impacts of climate change in China, such as reduced water availability and agricultural productivity, more extreme weather conditions, and worsened air pollution tied to extreme heat.

    By working with the US and over 100 other countries to phase down HFCs under the Montreal Protocol, China has a chance to help implement a true win-win strategy for its people, its companies, its climate, and its international relations. As President Xi said: “China and the United States must find a new path, one that is different from the inevitable confrontation and conflict between the major countries of the past.” China clearly recognizes that this agreement on HFCs offers a chance for the start of a new path on climate change, one that benefits China and the world. This week’s Montreal Protocol meeting in Bangkok could be a critical advance, one that would see countries formally launch negotiations to phase down the contribution of these super greenhouse gases to climate change. 

    * Global Warming Potential (GWP) is a measure of the potency of a gas in comparison to CO2, so a chemical with a GWP of 1430 as commonly used in car air conditioners has 1430 times the potency of CO2 in warming the climate.

    ** "Non-A5" under the Montreal Protocol are the developed countries and "A5" are the developing countries.

    *** Thanks to Xiaopu Sun and Stephen Andersen of the Institute for Governance & Sustainable Development for helpful input on this post.


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