HFC-Busters... Who You Gonna Call?

While carbon dioxide gets the most attention, other heat-trapping pollutants contribute to rising temperatures and the dangers of global warming.  One set of chemicals, called hydrofluorocarbons (HFCs), poses a rapidly growing threat.  The world community has a big opportunity to reduce future warming by intervening now to avoid HFC growth and phase these chemicals down in an orderly manner.

HFCs are replacing ozone-depleting chemicals that are being phased out under the Montreal Protocol, the successful treaty to protect the ozone layer.  The Montreal treaty has already eliminated more than 95 percent of ozone-destroying chemicals in both developed and developing countries (see here).  The most prominent - chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) - have thousands of times the heat-trapping potency of carbon dioxide, and so the Montreal phase-outs are also producing huge climate benefits (see here and here).

But attention must be paid not only to what is being phased out, but also to what is being phased in.  The rise of HFCs is a side-effect of the hugely beneficial actions already taken under Montreal.  And HFC growth is undercutting those benefits.    

According to a seminal scientific paper published last summer, HFC production and emissions could rise eight-fold by 2050 if nothing is done, with most of the growth occurring in rapidly industrializing developing countries.  HFCs would then amount to 9-19 percent of all global heat-trapping emissions in the business-as-usual case, wiping out the climate benefits of having eliminated CFCs and HCFCs and undermining efforts to cut CO2.

So who you gonna call?

One possibility is to use the Montreal Protocol to address the side-effects of its own creation.  The Montreal treaty, which now includes all 196 nations on earth, has a proven track record of achieving global action on a fair and effective formula:  All countries agree to phase down their production and consumption of the covered chemicals.  Developed countries act first, and developing countries follow after a short grace period, with developed countries providing them financial and technical assistance through a multilateral fund.  (Note:  "consumption" is a term of art meaning "production + imports - exports".) 

The other possibility is to rely on the climate protection treaties.  HFCs emissions are currently covered under the UN Framework Convention on Climate Change and the Kyoto Protocol.  HFCs are included in the "basket of gases" that developed countries must limit during the years 2008-2012.  But as is well known, Kyoto doesn't cover the U.S., which never ratified it, and Kyoto puts no emission-limiting obligations on developing countries. 

Intense negotiations are now underway on the future climate regime, focused on the Copenhagen summit next month.  It remains to be seen what future emission reductions developed and developing countries will agree to, and what assistance will be provided to help developing countries take those actions and to adapt to climate impacts that cannot be avoided.  Not surprisingly, most of the attention in the climate negotiations falls on CO2 ("CO2 sucks all the oxygen out of the room"), and there has been little focus there on HFCs. 

So back to the Montreal Protocol.  The parties held their annual meeting last week on the shores of the Red Sea in Egypt.  There, countries made a first attempt to nip HFC growth in the bud.  Two phase-down proposals were offered:  One from Micronesia, Mauritius, and other small island nations (here and here), and another from the United States, Mexico, and Canada (here and here). 

The treaty parties were unable to reach agreement on these proposals this year.  Nonetheless, the door may be open for action next year.  There was a mixture of reasons for this year's outcome. 

On the surface, the debate in open session seemed to swirl over a legal question:  Which treaty has jurisdiction over HFCs?  Proponents of acting under Montreal argued that this treaty authorizes the parties to take responsibility not only for ozone-depleters, but for substitutes that endanger the climate.  They also noted that the two treaties can co-exist, with HFC emissions continuing to count under Kyoto, and with Montreal assisting by curbing HFC production and consumption.  Opponents countered that HFCs are expressly included in Kyoto and that the climate treaties exclude "greenhouse gases controlled by the Montreal Protocol" - from this they reasoned that all things pertaining to HFCs must be left to the climate treaties. 

Legal experts viewing the debate privately agree that there's room for either view.  And depending on what countries want to do going forward, they can make the necessary changes in future agreements.

So the legal argument masked what was really going on.  In my view, there were three significant issues at play.  Two of them are fairly modest concerns internal to the Montreal process.  They are readily resolvable and this gives cause for optimism about taking action on HFCs under Montreal next year.  Let's address them first.

Many countries called for more information on alternatives before taking positions on the amendments.  Many delegates have fair questions about which alternatives substances and technologies will be available, on what schedule, and at what cost.  These are questions the parties are used to asking of their Technological and Economic Assessment Panel and that the panel routinely answers.  The panel's next report is coming next spring.

A second concern is that final agreement has not yet been reached to fund implementation of the accelerated phase-out of HCFCs agreed upon in 2007.  Developed countries promised "stable and sufficient funding" to help developing countries carry out their commitments.  But the parties are still negotiating on the formula for that funding.  The HCFC funding issue is likely to be resolved soon, but until it is settled many developing countries are wary of leaping into an agreement on yet another set of chemicals, the HFCs. 

The third issue is more problematic.  Basically, the Montreal negotiations taking place in Egypt just one month before the Copenhagen summit came too far into the gravitational field of the climate negotiations.

The premise of the island nations and the North Americans was that progress could be made under the balanced and effective Montreal framework even while the climate talks were underway - that other countries would want to keep Montreal matters entirely separate from the Copenhagen process, or even would see a chance to give that process a lift a month before the climate summit. 

It was perhaps not surprising that this premise proved wrong, at least for this particular moment. The high-stakes climate negotiations are red hot, and many countries, ranging from the European Union to India and China, chose to link, not de-link, the Montreal HFC proposals to them.

The EU position seems hardest to understand.  After initial reluctance, they now profess to want to curb HFC production and consumption under Montreal.  All they want, they say, is for the climate treaty parties to adopt an "enabling" provision in Copenhagen - a clause tasking the Montreal treaty to take this on.  This compromise seems to have settled squabbles between climate and ozone authorities within the EU.  But it plainly creates another choke point in Copenhagen.  For each developed country "ask" in the climate negotiations, something else probably may have to be conceded to get blockers out of the way. 

India's and China's positions were also somewhat nuanced.  These countries took two stances.  On the one hand, they raised reasonable technical and economic questions - tell us what are the substitutes and what will they cost.  As already noted, these questions will largely be answered by the Montreal treaty's technical panel early next year, and through other commercial and governmental avenues.  So this message communicates the potential to make a deal, just not now.

On the other hand, those two delegations steadfastly refused to engage on the HFC proposals.  They would not let negotiation of phase-down schedules and associated funding commitments get started, insisting that these were matters for Copenhagen.  Both countries clearly are holding their cards until the climate summit. 

Both countries are also protecting the benefits they currently derive from the Kyoto Protocol's Clean Development Mechanism, which - in a move now widely regretted - okayed carbon credits for incinerating HFC-23, a powerfully heat-trapping byproduct of HCFC production in China, India, and several other countries.  The problem is that the CDM arrangement vastly overpays for the incineration process - paying out billions of dollars for actions that cost perhaps only a few percent of that amount.  The big money in HFC-23 destruction is perversely subsidizing an increase in HCFC-22 production, just to get more byproduct to destroy.  And the carbon credits don't benefit the climate because they are used to allow higher emissions in developed countries.  Europe, the U.S., Japan, and others realize now that this is a bad deal for both the ozone layer and the climate.  Even Mexico supports an end to the HFC-23 destruction credit program notwithstanding the fact that one its own chemical producers benefits.  Most observers expect this gravy train to end, with existing projects allowed to earn credits for only a few more years, and no new ones approved.   

But India and China seemed unwilling to give this one up just yet.  Their delegates talked repeatedly about the need to consult with their industry stakeholders.  What appears to be going on is that the industries raking in the HFC-23 credits are pushing their governments to give it the old college try in Copenhagen.  (The Chinese government itself is a beneficiary, because it taxes two-thirds of the windfall profits its industry get from this deal.) 

If, as expected, the next deal struck in the climate treaty negotiations brings the HFC-23 credits to heel, then we can expect India and China to look with greater favor on the more modest financial help they can get from the Montreal multilateral fund, which pays the actual incremental costs of control measures with a reasonable profit margin.

Thus any reports that the Montreal HFC proposals are dead would be premature.  In fact, at the end of the Egypt meeting, 41 countries including the U.S. and Japan joined in a declaration supporting action next year.  (I'll link to the declaration when it is posted.)

So watch what happens in Copenhagen.  When that outcome is known, all of the countries that met here in Egypt this week will reassess their positions on HFCs.  There's room for optimism that the Montreal Protocol will score another global phase-down deal, supported by a fair funding arrangement, next year.

Who you gonna call?