Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer
Introduction
3.1
This chapter reviews the Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer (the Montreal Protocol) signed on 15 October 2016 in Kigali and tabled in the Parliament on 22 June 2017 (the Kigali Amendment). The Montreal Protocol was initially signed in September 1987, and entered into force for Australia on 17 August 1989.
3.2
The Kigali Amendment will enter into force on 1 January 2019 if at least twenty countries have deposited their instruments of ratification, acceptance or approval. If this condition has not been met by 1 January 2019, the amendment will enter into force on the ninetieth day following the date from fulfilment.
Background
The Montreal Protocol
3.3
The Montreal Protocol resulted from the Vienna Convention for the Protection of the Ozone Layer (the Vienna Convention), which was adopted in 1985 and subsequently received universal ratification. The convention’s objectives were to promote cooperation by means of systematic observations, research and information exchange on the effects of human activities on the ozone layer.
3.4
The Montreal Protocol mandates the phase-out of scheduled ozone depleting substances on a differentiated basis for developed and developing countries. The last major class of ozone depleting substances (hydrochlorofluorocarbons or HCFCs) is currently being phased out.
3.5
Australia has accepted all six previous amendments to the Montreal Protocol. The Department of the Environment and Energy noted the success of the Montreal Protocol in achieving its aims:
The Montreal Protocol community is very proud not only of its ozone-related accomplishments but also of its climate accomplishments. It has achieved more greenhouse reductions through its phase out of ozone-depleting substances than the whole first phase of the Kyoto protocol.
Overview of the Kigali Amendment
3.6
The Kigali Amendment will mandate the global phase-down of hydrofluorocarbons (HFCs). According to the NIA, although HFCs are not ozone depleting, they are considered to be of high global warming potential. For example, the release of 1 megatonne of HFC 23 is equivalent to releasing 14 800 megatonnes of carbon dioxide into the atmosphere.
3.7
The NIA states that HFCs are used in the same sectors and industries as many of the ozone depleting substances. The NIA suggests therefore that the existing Montreal Protocol infrastructure is deemed to be suitable for management of the phase-down of HFCs.
3.8
The NIA points out obligations under the Amendment are different for developed and developing countries. For developed countries (including Australia), the baseline is established from 2011–2013 HFC consumption (imports plus production). The phase down will occur between 2019 and 2036, with 15 per cent of the baseline still available from 2036 onwards for hard to transition uses.
3.9
The NIA explains that, for most developing countries, the baseline is established from 2020–2022 HFC consumption. The phase-down will occur between 2024 and 2045, with 20 per cent of the baseline remaining available for hard to transition uses from 2045 onwards.
Reasons to undertake proposed treaty action
3.10
According to the NIA, ratification of the proposed treaty action stands to benefit Australia in a number of ways. Acceptance of the Kigali Amendment highlights Australia’s commitment to international action on climate change and could allow Australia to maintain its leadership role in relation to the Montreal Protocol.
3.11
The NIA states that acceptance of the Amendment is in line with the Australian Government’s commitment to phase down the import of HFCs from January 2018 to reach 85 per cent by 2036. Legislative instruments have been introduced to Parliament to facilitate this, and would also act to implement Australia’s obligations under the Kigali Amendment.
3.12
The NIA suggests that acceptance of the Amendment may also assist Australia in reaching its commitment to achieve the 2030 emissions reduction target under the United Nations Framework Convention on Climate Change (UNFCCC) by reducing HFC use.
3.13
The Committee asked what percentage of Australia’s climate change emissions reduction commitment will be covered by the changes that come into effect under the Kigali Amendment. The Department could not provide an exact answer at this stage but explained that the current estimate of cumulative reductions required to meet Australia’s 2030 target is 990Mt-1055MtCO2e- and the HFC phase down is estimated to result in 23MtCO2e- of emissions reductions for the period 2021–2030. The Department expects to be able to provide a more accurate estimate in the future:
The projections will be updated in 2017 to include new policies, including the phase down of HFCs, as well as updated industry forecasts. The Department will then be in a better position to indicate what the HFC phase down will contribute to the 2030 target.
3.14
The NIA states that the gradual phase down of HFCs is largely supported by Australian importers and users of refrigeration and air conditioning technologies and suggests that the approach provides long term certainty on the availability of HFCs, creating an environment conducive to the innovation and introduction of new technologies.
3.15
The Committee asked which Australian industries would be impacted by the phase-down of HFCs. The Department explained that, other than refrigeration and air conditioning, there were a small number of industries that would be affected:
… there are smaller uses in fire protection in some very specialised circumstances; phone production, where it’s needed for thermal insulation; and some medical metered dose inhalers such as asthma inhalers. They’re probably the key ones. … it’s an industrial chemical that has a wide variety of uses, but refrigeration and air conditioning, as a refrigerant in equipment, is the main use.
3.16
The Committee queried what effective alternatives were available for industries affected. The Department admitted that there were some areas were alternatives were not successful, particularly refrigeration equipment in high-ambient-temperature situations. However, for uses such as metered-dose asthma inhalers there are alternatives available.
3.17
The Department advised that the Protocol now provides for a 15 per cent residual to accommodate instances where an alternative is not available:
It’s the first time a residual has been permitted under the Montreal Protocol. Previously it’s been a 100 per cent phase-out, which has caused some difficulties as you get towards the end, because you have very small uses where it is actually difficult to find replacements and it can be an economic challenge to put that investment in. Under the HFC phase-down, there’s the 15 per cent residual available, which is to cover off a number of things, including uses where alternatives aren’t available or it’s not viable to actually move to the alternatives.
3.18
The Department explained that there is provision for an exemption for countries that experience high-ambient-temperatures, in order to allow them time for technological solutions to be put in place:
While they’re availing themselves of the exemption … they’re not allowed to receive funding from the multilateral fund for that period. Those countries also have a slightly delayed start-up schedule, so their schedule is pushed back a little bit to also permit the technologies that they need to come onto the market in time for them to start their phase-down activities.
The Agreement
Obligations
3.19
Annex F of the Kigali Amendment lists the 18 HFCs for which parties are required to reduce consumption.
3.20
Article 2J(1) provides the target rates of reduction in consumption of HFCs for most developed countries including Australia:
2019 – reduction of 10 per cent from baseline;
2024 – reduction of 40 per cent from baseline;
2029 – reduction of 70 per cent from baseline;
2034 – reduction of 80 per cent from baseline; and
2036 onwards – reduction of 85 per cent from baseline.
3.21
The HFC baseline for developed countries is calculated using the average consumption of HFCs in the years 2011, 2012 and 2013 plus 15 per cent of the HCFC baseline to account for transition to HFCs from HCFCs.
3.22
A number of Articles under the Montreal Protocol have been extended to include reference to the HFC phase-down. These include:
Article 3 which creates obligations relating to the calculation of control levels of listed HFCs;
Article 4 which requires Parties to ban the import and export of HFCs from parties not subject to the protocol, once the provisions enter into force;
Article 7 which requires Parties to report the production, import and export of HFCs between 2011 and 2013; and
Article 10 which obliges parties to provide financial and technical cooperation to developing countries, enabling them to comply with measures relating to HFCs.
3.23
Other obligations relate to the production of HFCs and HCFC-22. The NIA states that, as Australia does not produce HFCs or HCFC-22, these obligations are not applicable to Australia.
Entry into force
Implementation
3.24
Provisions are already in place under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 to facilitate the implementation of the Kigali Amendment.
3.25
The NIA states that the Australian government previously committed to an 85 per cent phase down of HFC imports by 2036. This measure was a recommendation of a two year review by the Department of the Environment and Energy on the Ozone Protection and Synthetic Greenhouse Gas Program (OSGG Program).
3.26
The phase-down is due to begin in Australia from 2018, a year earlier than required by the Kigali Amendment. Enabling legislation was passed by the parliament through the Ozone Protection and Synthetic Greenhouse Gas Management Legislation Amendment Act 2017 which received royal assent on 23 June 2017.
3.27
The Department of Environment and Energy stressed that Australia has gone further than required with the implementation program:
Domestically, the Australian government has agreed that Australia’s phase-down of hydrofluorocarbons can be more ambitious than that agreed under the Kigali amendment. The Australian phase-down starts 12 months earlier, from 1 January 2018 instead of 1 January 2019; it uses a lower starting point of eight megatonnes of carbon dioxide equivalent instead of the 10.7 megatonnes of carbon dioxide equivalent which was the starting point set by the Kigali amendment; and it will use two-yearly phase-down steps rather than the larger steps agreed to internationally. Taken together, these changes mean that Australia will use 25 per cent less hydrofluorocarbons than permitted internationally under the Kigali amendment.
3.28
The Committee asked what steps have been taken to decommission automobiles and buildings that have HFCs present in air conditioning or cooling systems. The Department advised that the Ozone Protection and Synthetic Greenhouse Gas Management Act and regulations have provisions to address the issue. In addition, industry has established a reclamation program:
There’s also an industry operated and funded program, Refrigerant Reclaim Australia, which provides incentives to refrigeration and air-conditioning technicians to recover and dispose of gas. To dispose of is to generally destroy the gas.
Costs
3.29
As a developed country, Australia has financial obligations to the Montreal Protocol, through its Multilateral Fund. Australia’s contributions are sourced from the Department of Foreign Affairs and Trade’s (DFAT’s) Overseas Development Aid budget. According to the NIA, Australia’s contributions have been between $3–5 million per year. Funding countries will be expected to provide additional funding to assist developing countries meet the requirements to phase down HFCs.
3.30
The exact amount of additional funding required will be determined every three years following replenishment negotiations. The NIA expects that total additional contributions would be approximately $145 million over a 30 year period.
3.31
The Department told the Committee that the money provided to assist developing countries meet their obligations under the Protocol is distributed through a multilateral fund. Australia is a member of the board of the fund and plays an active part in assessing how the money is spent:
The multilateral fund looks at a three-year work program, so we don’t make an up-front commitment for the whole period; there’s an assessment of contributions, and we would look at what was proposed to be supported through that each three years and make our assessments in relation to it …
3.32
According to the NIA, further financial implications are negligible, due to the Australian Government’s previous decisions to phase down the import of HFCs.
3.33
A cost-benefit analysis undertaken for Australia’s domestic HFC phase down estimated that the transitional and administrative costs for the period between 2016 and 2030 would be around $2.5 million for government and less than $1 million for industry.
3.34
However, the NIA states that increased costs to industry regarding gas, maintenance and capital are estimated to be $30–84 million for the same period.
3.35
The Committee queried if small business would bear the burden of these costs. The Department does not expect the cost burden to unduly affect any particular sector of the economy:
While there was no specific modelling in relation to small and medium sized enterprises, the Department estimates that costs would be spread fairly evenly across the economy. HFC costs are unlikely to increase due to the phase-down as the pace of the phase-down is modelled against projected future demand.
3.36
With regard to emergency services the Department assured the Committee that such services should not face any extra costs:
… essentially it would be very minor, because refrigeration and air-conditioning wouldn’t be a big part of emergency services costs. And from the fire protection side of things, we’re looking at the special hazards category, which is things like computer rooms et cetera. So, it’s more a cost to the operators of those facilities rather than emergency services.
Committee comment
3.37
The Committee acknowledges the success of the Montreal Protocol and its role in assisting Australia to reach its climate change emissions reduction targets.
3.38
The Committee supports the amendments to the Montreal Protocol and recommends that binding treaty action be taken.
3.39
The Committee supports the amendments to the Montreal Protocol on Substances that Deplete the Ozone Layer and recommends that binding treaty action be taken.