Decision 81/71

On the basis of the recommendations of the Sub-group on the Production Sector, the Executive Committee decided:

1. To note:
   1. The submission of stage II of the HCFC production phase-out management plan (HPPMP) for China, which had been considered by the Sub-group on the Production Sector;
   2. That the revised proposal submitted by the World Bank addressed several of the issues that had been raised by the Sub-group on the Production Sector in relation to the previous proposals submitted to the 79^th and 80^th meetings of the Executive Committee;
   3. That other relevant issues, including the calculation of the lost profit, the distribution of funding across tranches, the duration of stage II and subsequent stages, including the 2030–2040 tail-end, and the funding requirements for technical assistance activities and the project management unit, had not, however, been fully addressed and that the Sub-group on the Production sector had consequently been unable to recommend consideration of the proposal by the Executive Committee;
   4. With appreciation, that the Government of China had complied fully with all the conditions set out in its Agreement with the Executive Committee in relation to the reduction in HCFC production in accordance with stage I of the HPPMP and that, as at March 2018, 94.2 per cent of the total funding approved for stage I of the HPPMP had been disbursed to the final beneficiaries;
   5. That immediate funding for the production reduction and/or closure of HCFC production lines eligible for funding would assist the Government of China move towards compliance with its 2020 obligations under the Montreal Protocol;
2. To approve, on an exceptional basis, and without setting a precedent with regard to the overall level of funding of stage II of the HPPMP and the funding tranches therein, the sum of US $23,000,000, plus agency support costs of US $1,288,000 for the World Bank, on the understanding:
   1. That the Government of China agreed that the maximum allowable level of production of HCFCs for 2018 would be 22,742 ODP tonnes, and the amount of funding provided could be reduced by US $1.73 per kg/year of production beyond the above-mentioned level;
   2. That the Government of China would:
      1. Organize bidding in relation to production closure or quota reduction to reduce 1,188 ODP tonnes of HCFC production in 2018, issue the quota at the reduced level for 2018, and begin to address the sustainability of the phase-out of HCFC production in relation to the environment impact assessment;
      2. Provide specific technical assistance to support enterprise-level activities, including continued monitoring and verification of each compensated production line;
      3. Ensure that any compensated plant would not redirect any phased out HCFC production capacity towards feedstock use, subject to a penalty of US $0.15 per kg of redirected production per year;
      4. Coordinate with its stakeholders and authorities to make best efforts to manage HCFC production and associated by-product production in HCFC plants, in accordance with best practices to minimize associated climate impacts;
      5. Optimize the implementation of the activities in 2018 in order to minimize environmental and climate impacts as much as possible, including by giving priority to HCFC production closure to achieve the HCFC reduction targets set out in decision XIX/6;
      6. Ensure that any funds in possession of the Foreign Economic Cooperation Office of the Ministry of Environmental Protection would return a reasonable rate of accrued interest, and that any interest would be offset against stage II of the HPPMP;
3. To note that the approved funding of US $23,000,000 indicated in sub-paragraph (b) above would be deducted from the funding of stage II of the HPPMP; and
4. To defer consideration of stage II of the HPPMP and to invite submission of a revised proposal to the 83^rd meeting pursuant to discussions at the 82^nd meeting on issues remaining to be addressed indicated in sub-paragraph (a)(iii).