Co-authored with Bhaskar Deol
This is huge news: India—not long ago a reluctant player on the global climate stage—is poised to become a key country putting the Paris Climate Agreement over the top, translating the promise of Paris into actions that we need to protect our future.
Prime Minister Narendra Modi and the cabinet approved the decision to ratify the Paris Agreement, and that ratification will be formally submitted on October 2nd—Mahatma Gandhi’s birthday. With India’s ratification, it is very likely that the Paris Agreement could enter into force this October.
One can’t help think that Gandhi would appreciate the symbolism of India, on this day, helping lead the global community as it addresses the central environmental challenge facing the world—a challenge that will undeniably harm the most vulnerable the hardest.
And India has yet another golden opportunity to demonstrate its progressive participation in international climate action at the upcoming meeting in Kigali, Rwanda on the Montreal Protocol. Like the Paris Agreement, India’s progressive participation and leadership are critical to halting the surge in hydrofluorocarbons (HFCs)—super-potent greenhouse gases. India’s participation is critical to expanding climate protection, especially for vulnerable communities, since HFCs are currently the fastest growing climate pollutants.
HFCs—used mostly in air conditioning and refrigeration, for making insulating foams, and in some aerosol products—pack thousands of times the heat-trapping punch of carbon dioxide. HFCs are super-pollutants that cause super problems in our atmosphere.
Though accounting for only 1-2 percent of total warming now, HFCs are the fastest growing climate pollutants because of the skyrocketing demand for air conditioning in developing markets. HFCs could raise global temperatures by as much as 0.5˚C by 2100 if growth continues on its current course, dramatically reducing chances of achieving the Paris targets to reduce greenhouse gases and hold down global temperature rise.
Addressing HFCs under Montreal Protocol is essential to protecting the planet from climate change, and would work toward global efforts to meet the 1.5˚C pathway outlined in the Paris Agreement. Early action on HFCs—phasing down their use and replacing them with safer alternatives—is especially crucial considering the devastating impacts of climate change on vulnerable communities from massive flooding to deadly heat waves in India and other nations.
All countries support a global agreement under the Montreal Protocol for phasing down HFCs. During the June 2016 US-India Summit, Prime Minister Modi and President Obama pledged to achieve an HFC phase down agreement at the Kigali meetings in early October. Several other world leaders have also promised support for an agreement and countries are working in good-faith.
The momentum is growing. Last week during the meeting of the United Nations General Assembly in New York, countries, business leaders, subnational governments, and philanthropists united for strong action under the Montreal Protocol. A total of 105 countries—including the Africa Group, Pacific Island countries, leading Latin American and Caribbean countries, the United States, European Union, Japan, and other developed countries sent a clear signal that they want a strong agreement. Countries are calling for an agreement with “an early freeze date” and “ambitious phase down schedule”. To support an early start, major governments and private foundations promised $80 million in new funding in 2017, focused on developing markets for “fast-start support for implementation and energy efficiency improvements”—critical to growing markets grappling with energy scarcity.
In efforts to work towards consensus, the Indian government is engaging in a series of stakeholder discussions. One of the key issues is the selection of baseline and freeze years for phasing down HFCs for developing countries. Current options on the table diverge by over 10 years. The difference between the least and most ambitious proposal is nearly 50 gigatonnes of CO2 emissions—equivalent to emissions from the entire global economy for five full years. India is proposing 2031; China and Pakistan propose 2025; and the majority of developing and developed countries, including the African group, Pacific Island countries, Latin America countries, North America and the European Union, are proposing 2021. Central to the start date (freeze year) discussions are industry views and the cost of an HFC phasedown and environmental benefits.
Leading Industry Voices in India
Leading businesses in India support early action to phase down HFCs. Companies, such as Godrej, Daikin, Ingersoll Rand, Unilever are leaders in their segments and are moving forward with environmentally friendly and more energy efficient alternatives. The automobile industry is phasing down HFCs internationally, signaling opportunities for the export market. Achieving a favorable Montreal Protocol HFC agreement is a major opportunity for Indian companies to look ahead and avoid obsolete technology while covering transition costs from Montreal Protocol’s Multilateral Fund and spurring use of energy-efficient appliances.
Three key signals show that Indian industry is ready for an early start:
- Leading companies active in India, including Daikin, Godrej Group, Ingersoll Rand, Danfoss, Dell, Hewlett Packard, Johnson Controls, Microsoft, and many more joined over 500 global companies and associations in calling for an aggressive phase down of HFCs this year. Specifically, industry leaders said in a statement, “Today, we call upon world leaders to adopt in October an ambitious amendment to the Montreal Protocol, including an early first reduction step for [non-Article 5] countries and a freeze date for Article 5 countries that is as early as practicable, and we declare our intent to work to reduce the use and emissions of high-global-warming-potential HFCs and transition over time to more sustainable alternatives in a manner that maintains or increases energy efficiency.”
- Jamshyd Godrej, Chairman of India’s Godrej & Boyce, said a phase-out of HFCs would provide India with “significant energy and financial savings for consumers, industry and government.” Godrej & Boyce has a production line in India of room air conditioners with R-290, a hydrocarbon based air conditioner using natural refrigerants. These innovative air conditioning units have very low global warming potential and high energy efficiency.
- Navin Chemicals and SRF, India’s top two chemical manufactures, can now produce HFOs (HFC alternatives) domestically. Navin Chemicals announced a licensing agreement with Honeywell for production of HFO-1234yf in India, and is expected to begin production in early 2017. SRF, the market leader, is setting a up new pilot plant for domestic production and has significant expertise leveraging domestic R&D for developing alternative chemical production processes. In addition, a range of new, climate-friendly refrigerant alternatives are entering the market and patents for some key low-GWP alternatives are set to expire by mid-2025 or earlier. Indian companies have R&D opportunities to pursue alternative manufacturing processes, as well as energy efficient innovations with the new funding announcement.
Cost Analysis for Montreal Protocol—New International Expert Report
The United Nation’s Technical and Economic Assessment Panel (TEAP) released a new study this month examining the “climate benefits and costs” of reducing HFCs through the four main country proposals. It finds that benefits are much larger than the costs even in the most aggressive scenario, and early action is better. The Multilateral Fund can supports industries in developing markets for transitioning away from HFCs by paying the agreed incremental cost (loss of profits) for companies to convert. The TEAP analysis finds that earlier freeze dates combined with lower baseline values provide larger climate benefits. It calculates costs on basis of installed manufacturing capacity in the year the freeze commences. It also estimates total costs for manufacturing conversion, for servicing and for HFC production phase-down. Although costs are dependent on the baseline levels selected, the report finds that they are lower the earlier the freeze date sets in.
The central question for productive discussions to achieve an agreement is to examine the costs for companies to transition away from HFCs. While other analyses, such as economy wide scenarios, are informative, they do not provide a basis for transition costs needed that would help the Multilateral Fund determine the amount for companies to transition to better alternatives. The new TEAP report, as demonstrated in the graph below, shows both the transition costs and the environmental benefits for Article 5 parties under each of the four main proposals.
According to the TEAP analysis, the cost for phasing down HFCs in A5 countries under Island States proposal with a 2020 freeze date ranges from $7.4 to $4.5 billion, and similarly the North America proposal with a 2021 freeze date ranges from $6.5 to $4.3 billion. Phasedown costs for A5 countries under the European Proposal with a 2019 freeze date ranges from $8.2 to $5.3 billion, and the India proposal with a 2031 free date ranges from $14.2 to $9.2 billion. The environmental benefits inversely related showing that with an earlier freeze date the climate benefit is greater. The earlier that short-lived climate pollutants, such as HFCs with more than 10,000 times the global warming potential of carbon dioxide, are removed from the atmosphere, the much greater the climate benefit—underscoring the compelling need for fast and early action. Further, maturity of the technology determines the cost and therefore the non-A5 schedule is critical to driving economies of scale.
Next week, during World Sustainable Development Summit in New Delhi hosted by The Energy and Research Institute (TERI), the Indian government, business leaders, key experts, and civil society will come together to discuss new and emerging technology, days before the Montreal Protocol discussions begin in Kigali. The Summit is an important opportunity to build on the good-faith and momentum from India formally joining the Paris Agreement on October 2nd and pave the way for a big climate win in Kigali that expands climate protection for all.