Changing the course of the planet

5 December 2016

On 15 October, after seven years of negotiations, 197 countries reached a historic agreement in Kigali, Rwanda, to amend the Montreal Protocol and phase-down hydrofluorocarbons (HFCs). HFCs are refrigerant gases used for commercial, residential and automotive purposes, and are hundreds to thousands of times more potent than carbon dioxide. They were originally meant to replace hydrochloroflurocarbons (HCFCs) in order to protect the ozone layer, but their global warming potential has increasingly become a matter of concern in climate negotiations. The Kigali Amendment could thus abate global warming by up to 0.5° C.

The Kigali Amendment is not as ambitious or as flexible as desired. Earlier proposals from North America, Europe and Small Island States had demanded a 2021 freeze date for HFCs for all countries. India sought a 2031 freeze date. Eventually, developed countries agreed to an earlier baseline (2011-13) and freeze year (2019), while for most developing countries (including China), the baseline was set at 2020-22 with 2024 as the year to cap HFC use. India and a few other developing countries got an even later baseline (2024-26) with HFCs freezing only in 2028. The Kigali Amendment signals a good compromise, but before any blame is attributed (or credit claimed), it is important to understand why India demanded differentiated treatment.

Why latitude for India?

The deal accounts for differences in current consumption, future growth and overall income levels. India and China are the only developing countries that manufacture HFCs, but China’s output is much bigger given its significantly larger share of the global air conditioner (A/C) market. Even in 2050, India’s HFC emissions under business as usual conditions was projected to comprise 7 percent of the world total against China’s 31 percent. Moreover, India’s A/C market and HFC consumption pick up only after 2025. Thus, differentiation with China, which will by contrast witness rapid emissions during 2015-2030 (and therefore has to act sooner), was warranted.

Freezing HFCs prior to 2028 would have imposed additional costs where alternative refrigerants are currently comparatively much more expensive. HFO1234yf, an alternative for mobile air conditioning, is anywhere between four and 10 times more expensive than the current gas in use. The cost burden also extends to the one-time cost of product redesign, servicing equipment, training of servicing personnel, and per unit equipment costs.

In the lead-up to the Kigali meeting, a US$53 million philanthropic initiative was launched for energy efficiency measures in developing countries as a complement to shifting to HFC alternatives. While welcome, the actual costs of transition would be much higher. For India, economy-wide costs of an HFC phase-down could amount to €12 billion (US$12.7 billion) (sum of undiscounted costs, 2015 prices) under the original Indian proposal and €34 billion (US$36 billion) under the North American proposal between 2015 and 2050. In addition, it is unclear how much of the total costs will get covered by the Montreal Protocol’s Multilateral Fund until the guidance document on calculating costs is prepared. India wanted extra time until more information becomes available.

Another concern for India was access to technology. Many alternative gases are not currently manufactured in India, although firms are moving in that direction. Ideally, if more (patent-free) alternatives emerged, and their prices fell rapidly, India could be prepared to voluntarily begin a phase-out even earlier.

The other aspect of technology is the need to test alternatives under India’s high ambient temperature conditions. Testing for some chemicals has already begun but further verification was necessary before India could firmly commit. This is one reason why, in September, India announced a domestic, collaborative research and development programme to develop next-generation, sustainable refrigerants.

Gains from Kigali

Overall, India’s primary gain is that it has once again demonstrated willingness to be part of a multilateral climate deal while also being able to secure a differentiated outcome for itself. The deal allows India’s heating, ventilation and air conditioning (HVAC) sector to grow while giving refrigerant manufacturers time to shift to alternatives. A review of technological options is also envisaged so that India is not left stranded in 2028.

Amidst the uncertainty incurred by the outcome of the US election, the Kigali Amendment represents a particularly significant gain for climate action by reaffirming the multilateral cooperation of countries in the fight against global warming. Despite the different baselines, the bulk of global HFC emissions will start getting phased down earlier. Further to this, the deal is legally binding, and failure to act could invite non-compliance proceedings, making it a more effective deal than the Paris Agreement on Climate Change.

Up until two years ago, India was unwilling to even negotiate HFC phase-down under the Montreal Protocol. Extensive research within India combined with several rounds of consultations between government, industry and civil society helped to prepare the ground for a more informed and proactive approach to the negotiations.

The narrative of the global HFC negotiations also shifted, evolving from mere ambition to include economy-wide costs, differentiation, and high growth rates. Rather than resting on negotiated laurels, Indian industry now has to recognise the shifts in global markets, invest in technology, and nudge consumer behaviour towards more efficient and less damaging refrigerants. The international result is welcome; attention now shifts to domestic action.

An earlier version of this article appeared on The Hindu

Arunabha Ghosh is CEO and Vaibhav Chaturvedi is Research Fellow at the Council on Energy, Environment and Water.