Thursday, December 12, 2013

Cause and Effect? China's Position on Haloflourocarbons

In case you haven't seen it yet, a terrific article appeared earlier this week in the New York Times (here) about the role of the Montreal Protocol in cutting greenhouse gas (GHG) emissions. The Montreal Protocol, negotiated by the Reagan Administration (note to Republicans), was designed to phase out substances that deplete the stratospheric ozone layer. It so happens that several of those substances were also significant GHGs. Thus, while the Kyoto Protocol has done virtually nothing to reduce GHG emissions, the Montreal Protocol has prevented the global climate problem from being even worse than it already is.

Climate negotiators are now seeking to use the Montreal Protocol to regulate newer classes of refrigerants that do not deplete the ozone layer but do contribute to climate change. The New York Times article reports that China recently came on board this effort, and the US is now trying to get India to agree.

What I find interesting is China's decision to promote the use of the Montreal Protocol to control emissions of refrigerants that cause climate change; or, rather, the timing of China's decision. China has been a leading emitter of HFC-23, a very powerful GHG, which is a byproduct of production of the refrigerant HCFC-22. For many years, China was planning to build more and more new plants to produce HCFC-22, not so much because it needed the refrigerant, but in order to game the Kyoto Protocol's Clean Development Mechanism (CDM). European countries would pay China not to build plants that would emit HFC-23. Those countries would receive credits toward Kyoto and European emissions-reduction requirements. China would get lots of money - more money than it would get from selling more HCFC-22 refrigerant; more, even, than it cost to actually dispose of HFC-23. Once European regulators cottoned on to China's game, they promulgated a directive that banned CDM offsets based on reducing HFC-23 emissions in China as of 2013.

As European countries were virtually the only buyers of HFC-23 CDM offsets, once that market was closed to China, the game was up. Is it any wonder that China has subsequently agreed to use the Montreal Protocol to phase out the pollutant? Or that China is now in bilateral negotiations with the United States over phasing out HFC-23 and other high-potency GHGs?

Interestingly, the EU ban on HFC offsets also applies to projects in India, which has yet to agree to the plan to extend the Montreal Protocol to cover them. According to the New York Times story, the US is trying to cajole India into coming on board. But it's worth wondering why India requires cajoling at this point. Perhaps it's just seeking some side-payments; but, if so, it doesn't seem to have much leverage.

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