April 9, 2009

Executive Commitee approves US $27.5 million funding

At the 57th Meeting, the Executive Committee approved investment projects and work programme activities worth just over US $27.5 million for 84 developing countries to phase out ozone depleting substances including, in some cases, HCFCs.  Twenty-two countries received funding for institutional strengthening projects, including Iraq, a new Party to the Montreal Protocol in 2008.  Continuing its efforts to address the remaining CFCs ahead of the 2010 Montreal Protocol phase-out deadline, the Committee earmarked funds for Botswana, Equatorial Guinea, and Sierra Leone aimed at phasing out their entire CFC consumption. In total 31 countries received tranches of funding for multi-year projects to address the 2010 ODS control measures. Six countries received funding for ODS disposal projects and the Committee will further examine the criteria and guidelines for ODS disposal projects with a view to funding more projects.  

As part of its financial planning process, the Committee endorsed the business plans of the Fund’s implementing agencies for 2009 while only noting the activities tentatively planned for 2010 and 2011 due to the uncertainty in the costing of activities to accelerate the phase-out of HCFCs. The Committee will carry out a further analysis to equitably allocate the funds available in the 2010 and 2011 business plans of the agencies to enable all countries to comply with HCFC freeze in 2013 and the 10 per cent reduction in 2015.

The Committee addressed complex policy questions regarding the funding of HCFC phase-out projects, including the choice of HCFC phase-out technologies in relation to their costs and impacts on climate, whether to provide funding to enterprises that had been previously converted from CFC to HCFC technology through the Multilateral Fund, and the cut-off dates for funding after which conversions would not be eligible for Fund assistance. New approaches were discussed, one of which entailed shifting incremental operating costs from direct payment to enterprises, as had been the practice, to payment to countries based on a percentage of the capital cost associated with the conversion from HCFCs to the most cost-effective non-HCFC technology available.  Those resources could be used at governments’ discretion to establish, for example, a framework to address, climate‑related impacts. The other new approach involved a strategy for second-stage conversions beyond 2015 and even 2020, taking into account compliance needs and cost-effectiveness. These approaches are still under discussion.

In respect of climate benefits, the Committee discussed progress on the development of the functional unit approach as a basis for the prioritization of HCFC phase-out technologies to minimize other impacts on the environment, and also considered possible uses of a special funding facility within the Multilateral Fund which might potentially cover costs associated with climate benefits, as well as other additional environmental benefits which are not required for compliance with the Montreal Protocol. Climate related issues including concrete examples of the functional unit approach, the facility for additional income and resource mobilization will all be on the agenda of the 58th Meeting of the Executive Meeting in July 2009.