1. HFC Phasedown Under the Montreal Protocol OZONACTION NETWORK FOR LATIN AMERICA AND THE CARIBBEAN OCTOBER 6-8 2010 Mexico, D.F. Canada, Mexico and The United States

2. Scope of Presentation Trilateral Amendment Proposal Overview Legal Aspects Policy Rationale Comparisons Benefits Financial Assistance Path Forward HFC-23 By-Product Emissions From HCFC-22 Production Questions and Comments

3. Trilateral Amendment Proposal Canada, Mexico & United States Proposal –Phasedown, not Phaseout of HFCs Phases Down to 15% of Baseline –Phasedown is GWP-Weighted –Covers 20 HFCs, Including 2 known as HFOs –Limits By-Product Emissions of HFC-23 –Leaves UNFCCC Obligations Unchanged Supports Global Efforts to Reduce GHGs –MLF eligibility for Production & Consumption and HFC-23 By-Product Reductions

4. Montreal Protocol has Mandate with respect to HFCs Vienna Convention Article 2 provides scope to address HFCs –HFCs result in adverse effects resulting from ozone layer protection, so Parties can harmonize approaches to reduce impacts Trilateral HFC proposal includes provisions confirming obligations relating to HFC emissions continue unchanged under UNFCCC/Kyoto Protocol –Complements but does not replace existing UNFCCC obligations –Addresses consumption and production to assist in reductions of emissions –Similar to aviation and maritime bunker emissions to be addressed by ICAO and IMO

5. Mandate of Montreal Protocol with Respect to HFCs: Policy Aspects (1) Given HFC growth results from ODS phaseout, Montreal Protocol has special responsibility to address HFCs Montreal Protocol has long history of concern with HFCs: –MOP Decision X/16 (1998): convened workshop, in collaboration with UNFCCC, with view to assisting establishment of information on HFCs and PFCs and potential ways to limit their emissions –MOP Decision XIV/10 (2002): called on TEAP to collaborate with IPCC to develop report: Safeguarding the Ozone Layer and the Global Climate System; Issues Related to HFCs and PFCs –MOP Decision XX/8 (2008): called for report and workshop on high-GWP alternatives, principally HFCs, to ODS –ExCom Decision 60/44 (2010): allows for 25% funding increment, above cost-effectiveness thresholds, when needed for climate benefits, mainly to avoid selection of high-GWP HFCs

6. Mandate of Montreal Protocol with Respect to HFCs: Policy Aspects (2) While Montreal Protocol has not controlled HFCs, historically, it has taken key steps developing information and understanding on HFC use and emissions at global level Montreal Protocol has built world’s widest body of experience and expertise on sectors using HFCs Therefore, it is not only appropriate, but incumbent on Montreal Protocol to take action on HFCs –In collaboration with UNFCCC/Kyoto Protocol Ultimately, atmosphere will not care if HFCs have been reduced through Montreal Protocol, UNFCCC/Kyoto Protocol or both

7. Trilateral Proposal Phasedown Schedule

8. Federated States of Micronesia HFC Amendment Proposal: Differences A5 Country baseline established with different methodology –Article 5 average 2007-2009 HCFC Schedule differs –Reductions every 3 years until 2028, then plateau established in 2030 –Plateaus at 10% of baseline –Includes by-product control provisions starting in 2013

9. Proposed HFC Reduction Steps for Article 5 and Non-Article 5 Countries

10. Overview of HFC Proposals Trilateral Proposal Micronesia Proposal Non-A5 ScheduleA5 ScheduleNon-A5 ScheduleA5 Schedule YearCapYearCapYearCapYearCap 201490%201790%201385%201985% 201780%202180%201670%202270% 202070%202570%201955%202555% 202550%202950%202245%202845% 202930%203530%202530%203130% 203315%204315%202815%203415% Plateau15%Plateau15% 203010%203610% Plateau10%Plateau10% Non-A5 BaselineA5 Baseline Non-A5 BaselineA5 Baseline HFC+HCFC from 2004-2006 HCFC from 2007-2009

11. First Effective Year of Consumption Cap 2010 90% of Baseline 80% of Baseline Projected HFC Consumption Climate Benefits First Compliance Obligation 2014 Non-Article 5 Parties Estimated HFC Consumption & Benefits from Phase Down

12. Projected HFC Consumption 90% of Baseline First Compliance Obligation 2017 First Effective Year of Consumption Cap 2018 Estimated First Effective Year of Proposed Phase Down for Article 5 Parties

13. Substantial Climate Benefits Global Trilateral Proposal Cumulative Benefits: –~3,000 MMTCO 2 eq* through 2020 Non-Article 5 Parties = 3,000 MMTCO 2 eq Article 5 Parties = 150 MMTCO 2 eq –~88,000 MMTCO 2 eq through 2050 Non-Article 5 Parties = 43,000 MMTCO 2 eq Article 5 Parties = 45,000 MMTCO 2 eq FSM Proposal cumulative benefits: – ~4,000 MMTCO2eq through 2020 –~93,000 MMTCO2eq through 2050 EPA’s Analysis of HFC Production and Consumption Controls: http://www.epa.gov/ozone/downloads/Analysis_of_HFC_Production_and_C onsumption_Controls.pdf *MtCO2eq

14. consumption reductions emission reductionsemissions Trilateral Proposal Benefits in Context MMTCO 2 eq

15. Financial Assistance to Article 5 Parties Ensure timely financial assistance through MLF to address HFCs before huge growth takes place –Waiting longer makes it more difficult and costly to phase down HFCs see HCFC challenge –Waiting also increases damage to climate system Effective incremental cost model of MLF can address HFCs –Many countries indicated preference for MLF model in various international environmental forums and negotiations Allows short-term HFC growth to replace HCFCs when no other cost-effective alternatives are available Most Article 5 countries would not actually need to reduce HFC consumption or production until 2018 at earliest –Recognizes short-term focus must be on HCFC phase-out

16. HFC-23 By-Product Emissions Background: –HFC-23 is a by-product of producing HCFC-22 –HFC-23 has highest GWP of all HFCs –Controlled HFC-23 emissions are decreasing but uncontrolled HFC-23 emissions are increasing, in Article 5 Countries (Montzka, et al) –CDM projects cover <50% HFC-23 emissions in Article 5 Parties Amendment Controls By-Product Emissions –Covers Emissions from HCFC-22 Production Facilities –Makes By-Product Obligations Eligible for MLF Funding Would cover facilities not covered by CDM –Additional Benefits from HFC-23 Mitigation ~6,000 MMTCO 2 eq by 2050

17. Separate Decision on HFC-23 By-Product Emissions Recognizes HFC emissions covered by Kyoto Protocol to UNFCCC Requests ExCom of MLF to: –Update Information on Article 5 HCFC-22 Facilities, Including whether CDM-Covered –Develop Capital & Operational Cost Estimates –Formulate Guidelines by 64 th ExCom Meeting –Facilitate Implementation of Projects Request TEAP/SAP to: –Study Costs and Environmental Benefits

18. Summary HFC amendment proposals provide meaningful real opportunities for near-term climate benefits Montreal Protocol appropriate vehicle for HFC Phasedown amendment –Successful experience –Effective financial mechanism –Sector expertise –HFCs used tied to ODS phaseout