The international treaties that address stratospheric ozone depletion and global climate change may both have a role to play this year in paving the way for the future of HFC refrigerants. Unlike their CFC and HCFC predecessors, HFCs have no ozone depletion potential and were not included in the Montreal Protocol on Substances that Deplete the Ozone Layer, a treaty established in 1987. However, HFCs are included in the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol, treaties established in 1992 and 1997 respectively, because they are a greenhouse gas with global warming potential.

Background — Climate Treaties

Since 1992, HFCs have been listed as one of the six greenhouse gases in the UNFCCC, a treaty ratified by the United States that encouraged a return to 1990 levels of overall greenhouse gas emissions by 2000. There was little success by countries in meeting this nonmandatory stabilization target.

By 1997, countries sharpened their emissions-reductions commitments in the Kyoto Protocol, a spin-off treaty ratified by 187 countries, not including the United States. The Kyoto Protocol set binding targets for 37 industrialized countries and the European Union for reducing overall greenhouse gas emissions. These amounted to an average of five percent against 1990 levels during the five-year period 2008 to 2012. The inclusion of HFCs in the “basket of six gases” allows countries to reduce emissions of the overall basket without having to establish any specific reduction target for HFCs. This occurred because most expected HFCs to increase as a replacement for ozone-depleting gases.

This legally binding commitment remains in force for those ratifying countries but has been unsuccessful due in large part to the United States' refusal to ratify it, and its lack of coverage for developing countries. Parties to the climate treaties met in Copenhagen in December 2009 to work on new emissions-reduction targets for all countries, including the United States and developing countries. The expectation is that talks will continue in November in Mexico.

Background — Ozone Depletion Treaty

Only ozone-depleting substances such as CFCs and HCFCs are included in the 1987 Montreal Protocol, the only UN treaty that has been ratified by every country in the world — 196 nations. Industry and environmental organizations cooperated with countries to achieve success in establishing feasible phasedowns and phaseouts of ozone-depleting compounds, including refrigerants, because the process balanced the needs of the environment with technical and scientific expertise that allowed consideration of the availability of alternatives. Today, most view the 23-year-old Montreal Protocol as a model international environmental agreement because of its success in establishing a path for recovery of the stratospheric ozone layer.

2009 — An Active Year for HFCs

In September 2009, the United States, Canada and Mexico announced a joint “North American Proposal” to amend the Montreal Protocol to regulate the production and consumption of HFCs and to establish a developed country phasedown schedule in a manner similar to the schedule in a comprehensive climate change bill passed in June by the U.S. House of Representatives. The amendment also proposed a developing country phasedown schedule on a later track. The amendment addressed only HFC production and consumption while leaving unchanged the UNFCCC/Kyoto Protocol provisions that govern HFC emissions.

The United States stated that although HFCs pose no threat to the stratospheric ozone layer, they risk exacerbating the problem of climate change as potent greenhouse gases. In encouraging the Montreal Protocol as the new jurisdiction for HFCs, the United States noted that the Protocol was proven to be an effective and efficient instrument for tackling problems such as the HCFC phaseout, that the infrastructure and technical experts are in place for evaluating alternative refrigerants, and that we have to take advantage of any additional means that are available to address climate protection.

U.S. delegates and their allies lobbied diligently in November at the annual Meeting of the Parties to the Montreal Protocol in Port Ghalib, Egypt. Realizing that the amendment could take two years to achieve consensus, the United States wanted to send a signal to the parties gathering in Copenhagen that the Montreal Protocol could effectively handle the issue of HFCs.

India and other nations argued that the Montreal Protocol could not control HFCs because they are not an ozone-depleting substance. China wanted the issue to be discussed first in the climate change forum. Many developing countries wanted to solve the challenges posed by the HCFC phaseout before moving to address a phasedown of HFCs. They expressed a strong interest in the identification of alternatives before moving forward on a phasedown. Joining India and China were Kuwait, Qatar, Jordan, Malaysia, Venezuela, Colombia and other nations in strongly opposing the amendment. Supporting the amendment were the United States, Canada and Mexico in addition to the European Union, Japan, New Zealand, Indonesia, Nigeria, Dominican Republic and many smaller developing countries, especially the island nations. Nevertheless, the amendment failed due to a lack of consensus on the issue. Approximately 65 countries either endorsed or supported a nonbinding declaration supporting the amendment.

Page 2 of 2

Several countries, including some in Europe, have been concerned with shifting some control over HFCs to the Montreal Protocol without the “blessing” of the UNFCCC. Some delegates to the Copenhagen Climate Conference attempted to bring the issue to the table for discussion; however, the parties were preoccupied with an already overcrowded agenda as they worked toward a successor treaty to the Kyoto Protocol. U.S. delegates do not believe that it is necessary to raise the issue of HFC coverage in the UNFCCC setting.

2010 — Path Forward for HFCs

While any momentum to address HFC consumption and production in the Montreal Protocol appeared to dwindle with the failure of the North American Proposal in 2009, the United States is inclined to work with its North American allies to reintroduce the amendment and establish a schedule for an HFC phasedown in both developed and developing countries. It is necessary to introduce the amendment before mid-April in order to meet the Protocol deadline. Consideration would take place at a June working group meeting in Bangkok and at the annual Meeting of the Parties in October.

India, China and other nations are once again expected to oppose the amendment, but the United States, Canada, Mexico and the other supporters will strive to make a clear case for the amendment and pursue negotiations to convince wavering countries of the benefits of such a shift. The issue could gain momentum this year if data is more evident that feasible substitutes will eventually be available for HFCs on a timetable allowing for compliance with the proposed HFC phasedown, and if the developing countries are convinced that adequate funding will be made available to them for conversion from both HCFCs and HFCs to suitable alternatives in a manner consistent with the Protocol's goals.

If the United States decides to pursue an amendment this year, one can expect provisions similar to those proposed in 2009, which included initiation of a developed country phasedown in 2013, and interim steps as follows: 10 percent reduction in 2013; 20 percent reduction in 2017; 30 percent reduction in 2020; 50 percent reduction in 2025; 70 percent reduction in 2029; and 85 percent reduction in 2033. Developing countries would begin a phasedown in 2016, follow similar interim steps and culminate with 85 percent reduction by 2043. An amendment would most likely use a baseline of the average of 2004-06 annual production and consumption of HCFCs and HFCs.

The United States, Canada and Mexico have brought together a diverse group of more than 60 supportive countries. While developing countries usually remain united on many issues, it is interesting to note that this amendment divides them. The United States and the other supporters will have to negotiate the amendment carefully and meet with reluctant parties to assure them that the amendment is beneficial. If the amendment is signed, ratified and entered into force by the parties to the Montreal Protocol, HFCs would not only be addressed by the climate treaties, but by the Montreal Protocol as well.

Dave Stirpe is a partner at Alcalde & Fay, a government relations consulting firm in Arlington, VA. He has directed the Alliance for Responsible Atmospheric Policy since 1993. The Alliance, an industry coalition founded in 1980, addresses issues related to ozone depletion and global climate change on behalf of producers of fluorocarbons, and manufacturers and businesses that rely on them. Contact Dave at or 703/243-0344.