criteria for funding HCFC phase-out in the consumption sector in Article 5 countries

Criteria for funding HCFC phase-out in the consumption sector in Article 5 countries

Note that the decision 60/44 below regarding Criteria for funding HCFC phase-out in the consumption sector in Article 5 countries can also be found in the Report of the Sixtieth Meeting of the Executive Committee (document UNEP/OzL.Pro/ExCom/60/54) .

Following the description of the agreed criteria by the facilitator of the contact group on HCFCs, the Executive Committee decided:

In determining criteria for funding HCFC phase-out in the consumption sector in Article 5 countries:

Cut-off date

(a)

Not to consider any projects to convert HCFC-based manufacturing capacity installed after 21 September 2007;

Second-stage conversion

(b)

To apply the following principles in regard to second-stage conversion projects for the first stage of HCFC phase-out management plan (HPMP( implementation to achieve the 2013 and 2015 HCFC phase out compliance targets, to be reviewed by the Executive Committee no earlier than the last Meeting in 2013:

(i)

Full funding of eligible incremental costs of second-stage conversion projects will be considered in those cases where an Article 5 Party clearly demonstrates in its HPMP that such projects are necessary to comply with the Montreal Protocol HCFC targets up to and including the 35 per cent reduction step by 1 January 2020 and/or are the most cost-effective projects measured in ODP tonnes that the Party concerned can undertake in the manufacturing sector in order to comply with these targets;

(ii)

Funding for all other second-stage conversion projects not covered under paragraph (b)(i) above will be limited to funding for installation, trials, and training associated with those projects;

Starting points for aggregate reductions in HCFC consumption

(c)

To establish the starting points for aggregate reductions in HCFC consumption, for those Article 5 countries that submit projects in advance of their assessed baseline, at the time of submission of either the HCFC investment project or the HPMP, whichever is first submitted for the consideration of the Executive Committee;

(d)

To allow Article 5 countries to choose between the most recent reported HCFC consumption under Article 7 of the Montreal Protocol at the time of the submission of the HPMP and/or the investment project, and the average of consumption forecast for 2009 and 2010, in calculating starting points for aggregate reductions in HCFC consumption;

(e)

To adjust the agreed starting points for aggregate reductions in HCFC consumption in cases where calculated HCFC baselines based on reported Article 7 data are different from the calculated starting point based on the average consumption forecast for 2009 2010;

Eligible incremental costs of HCFC phase-out projects

(f)

To apply the following principles in regard to eligible incremental costs of HCFC phase out projects for the first stage of HPMP implementation to achieve the 2013 and 2015 HCFC phase out compliance targets, subject to a review in 2013:

(i)

When preparing HCFC phase-out projects in the foam, refrigeration and air conditioning sectors, bilateral and implementing agencies shall use the technical information contained in document UNEP/OzL.Pro/ExCom/55/47 as a guide;

(ii)

The current cost-effectiveness threshold values used for CFC phase-out projects in paragraph 32 of the final report of the 16th Meeting of the Executive Committee (document UNEP/OzL.Pro/ExCom/16/20), to be measured in metric kilogrammes, shall be used as guidelines during the development and implementation of the first stage of HPMPs;

(iii)

That countries will have the flexibility to allocate the approved funding from incremental operating costs to incremental capital costs and to allocate up to 20 per cent of the approved funding for incremental capital costs to incremental operating costs, as long as the use of the flexibility does not change the intent of the project. Any reallocation should be reported to the Executive Committee;

(iv)

Funding of up to a maximum of 25 per cent above the cost effectiveness threshold will be provided for projects when needed for the introduction of low global warming potential (GWP) alternatives;

HCFC phase-out in the foam sector

(v)

Incremental operating costs for projects in the foam sector will be considered at US $1.60/metric kg for HCFC-141b and US $1.40/metric kg for HCFC-142b consumption to be phased out at the manufacturing enterprise;

(vi)

For group projects linked to systems houses, incremental operating costs will be calculated on the basis of the total HCFC consumption to be phased out for all downstream foam enterprises;

(vii)

The Executive Committee will consider, on a case-by-case basis, funding higher levels of incremental operating costs than indicated in paragraph (f)(v) above when required for the introduction of low-GWP water-blown technology;

HCFC phase-out in the refrigeration and air-conditioning manufacturing sector

(viii)

Incremental operating costs for projects in the air conditioning sub-sector will be considered at US $6.30/metric kg of HCFC consumption to be phased out at the manufacturing enterprise;

(ix)

Incremental operating costs for projects in the commercial refrigeration sub sector will be considered at US $3.80/metric kg of HCFC consumption to be phased out at the manufacturing enterprise;

(x)

Consistent with decision 31/45 of the Executive Committee, incremental operating costs will not be considered for enterprises categorized under the refrigeration equipment assembly, installation and charging sub-sector;

HCFC phase-out in the refrigeration servicing sector

(xi)

Article 5 countries that have total HCFC consumption of up to 360 metric tonnes must include in their HPMP, as a minimum:

A commitment to meeting, without further requests for funding, at least the freeze in 2013 and the 10 per cent reduction step in 2015, and if the country so decides, the 35 per cent reduction step in 2020. This shall include a commitment by the country to restrict imports of HCFC-based equipment if necessary to achieve compliance with the reduction steps and to support relevant phase-out activities;

Mandatory reporting, by the time funding tranches for the HPMP are requested, on the implementation of activities undertaken in the refrigeration servicing sector and in the manufacturing sector when applicable, in the previous year, as well as a thorough and comprehensive annual work plan for the implementation of the following activities associated with the next tranche;

A description of the roles and responsibilities of major stakeholders, as well as the lead implementing agency and the cooperating agencies, where applicable;

(xii)

Article 5 countries that have total HCFC consumption of up to 360 metric tonnes will be provided funding consistent with the level of consumption in the refrigeration servicing sector as shown in the table below, on the understanding that project proposals will still need to demonstrate that the funding level is necessary to achieve the 2013 and 2015 phase-out targets, and if the country so decides, the 2020 phase-out targets:

Consumption (metric tonnes)*	Funding up to 2015 (US$)	Funding up to 2020 (US$)
>0 <15	51,700	164,500
15 <40	66,000	210,000
40 <80	88,000	280,000
80 <120	99,000	315,000
120 <160	104,500	332,500
160 <200	110,000	350,000
200 <320	176,000	560,000
320 <360	198,000	630,000

(*) Level of baseline HCFC consumption in the refrigeration servicing sector

(xiii)

Article 5 countries that have total HCFC consumption of up to 360 metric tonnes and that receive funding consistent with the above table, will have flexibility in utilizing the resources available to address specific needs that might arise during project implementation to facilitate the smoothest possible phase-out of HCFCs;

(xiv)

Article 5 countries that have total HCFC consumption of up to 360 metric tonnes, used in both the manufacturing and refrigeration servicing sectors, could submit HCFC phase-out investment projects in accordance with prevailing policies and decisions of the Multilateral Fund, in addition to funding for addressing HCFC consumption in the servicing sector;

(xv)

Article 5 countries that have total HCFC consumption above 360 metric tonnes should first address consumption in the manufacturing sector to meet the reduction steps in 2013 and 2015. However, if such countries clearly demonstrate that they require assistance in the refrigeration servicing sector to comply with these targets, funding for these activities, such as training, will be calculated at US$4.50/metric kg, which will be deducted from their starting point for aggregate reductions in HCFC consumption.

HCFC phase-out in the aerosol, fire extinguisher and solvent sectors

(xvi)

The eligibility of incremental capital and operating costs for HCFC phase out projects in the aerosol, fire extinguisher and solvent sectors will be considered on a case-by-case basis.