Joint SA-SEAP Ozone Officers Network Meeting Pattaya, Thailand October 2012 CHALLENGES FOR HCFC PHASE-OUT IN AIR CONDITIONING

1 BACKGROUND HCFC phase-out in developing countries has started. Short/medium term targets: Freeze in 2013, 10% reductions from 2015, 35% reductions from HCFC-22 is the predominant refrigerant used in air- conditioners in developing countries Consumption of HCFC-22 in manufacturing and servicing of air-conditioners in major developing countries is significant (typically >70% of total HCFC consumption) and growing rapidly

2 MARKET FOR AIR-CONDITIONERS Market for air-conditioners growing rapidly in developing countries – low baseline market penetration Estimated HCFC-22 based room air-conditioner sales (2011) in key developing countries in Asia-Pacific: Country2011 Sales China~36 million India3.30 million Indonesia1.40 million Malaysia1.00 million Philippines0.75 million Thailand1.25 million Vietnam0.50 million

3 MARKET FOR AIR CONDITIONERS (CONTD) By 2020, market for air-conditioners in Asia-Pacific could reach >100 million units and sales >US$ 20 billion By 2025, ~1 billion city dwellers will enter the global consuming class: an air-conditioner would be their first purchase* Most booming cities are in tropical climates Refrigerant charge volumes for new air-conditioners sold in Asia-Pacific (developing countries in 2011) estimated at ~50,000 metric tonnes annually(!) ____________________________ * McKinsey Global Initiative

4 ENERGY USE Electricity use for air conditioning in some cities with tropical weather: o Bangkok, Thailand – 60% o Delhi, India – 55% o Miami, USA – 40% o Mumbai, India – 50% o And the list goes on ……. Electricity use for air conditioning at the national level can range from <5% (temperate zones) to over 80% (some tropical/equatorial island states)

5 DIRECT AND INDIRECT EMISSIONS Global air-conditioner population is estimated at about 500 million to 1 billion (and growing)!! Use HCFCs or HFCs as refrigerants, both high GWP gases Each air-conditioner contains average kg of refrigerant and has 1.5 to 4 kw connected electrical load Annual direct and indirect CO 2 emissions from air conditioners globally, could be between 1 to 4 gt (1 to 4 billion CO 2 -eq tonnes)!!!

6 BACKGROUND (CONTD)

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11 TECHNOLOGY Need for lifecycle management approach in technology selection Manufacturing Use End of Life

12 TECHNOLOGY MOP Decision XIX/6 urges maximizing climate benefits when phasing out HCFCs Lifecycle CO 2 emissions from air-conditioners are % indirect and 5-40% direct. In developing countries direct emissions are higher due to local conditions Both energy use and refrigerant GWP are critical considerations to maximize climate benefits Currently there is no perfect alternative for HCFC-22. HFC and HC candidates involve compromises and trade-offs

13 TECHNOLOGY (CONTD) R-410A (GWP = 2,088*) has been the preferred alternative in developed country markets since ~2000. Population of air-conditioners with R-410A is already about 200 million (Dec 2010), mostly in developed countries: about 200,000 metric tonnes of R-410A in banks and increasing! R-410A energy-efficiency performance in general and in high-ambient conditions in particular Is R-410A a sustainable alternative for minimizing adverse climate impacts? ____________________________ * IPCC 4 th Assessment Report

14 KEY ISSUES AND CONCERNS Reducing HCFC-22 consumption in developing countries without clear technology and policy signals, will result in unintended and adverse climate impacts For example, if developing countries prohibit HCFC-22 based air-conditioners (manufacturing and imports), automatic technology choice is likely to be R-410A. Major developed-country technology providers showing preference for R-410A (e.g. R&D focus on optimizing R- 410 systems and components, new products based on R-410A etc.)

15 KEY ISSUES AND CONCERNS Significant expansion of HFC production facilities Extensive introduction of high-GWP technologies will lead to rapid increase in population of air-conditioners in developing countries, based on these technologies Considering prospective developing country markets by 2020, the net climate impact of HCFC phase-out with high-GWP technology, is most likely to be negative! A better, more forward-looking and climate-conscious approach to alternatives is needed!

16 WAY FORWARD What can industry do? Introduce and promote low-GWP, energy-efficient alternatives (R-32, R-290, others) on priority Support sustained R&D for new, better and safer molecules for substituting HCFC-22, as well as optimized components (e.g. compressors). Cooperate with MP panels and implementing agencies for sharing and disseminating latest technologies (e.g. demonstration projects, technology workshops)

17 WAY FORWARD What can developing country governments do? Support incentives for better alternatives Support policies that ensure level playing field for the industry players Involve industry in formulation of policies and regulations Support targeted and clear regulations that take into account GWP and energy efficiency

18 MLF FUNDING GEF/ BILATERAL/ PRIVATE-SECTOR FUNDING Montreal Protocol Measures (HCFC Phase-out) Direct Emission Reductions (low- GWP alternatives) Indirect Emission Reductions (EE improvements) Maximum climate impact WHAT WE ARE DOING Design interventions with dual objectives of ozone and climate protection

19 THANK YOU! Comments, suggestions and questions welcome