Decision 69/28

69th Meeting of the Executive Committee
April 2013
China
World Bank
Production approvals and reports

The Executive Committee decided:

  1. To note the report of the convenor of the Production Sector Sub-group, as contained in documents UNEP/OzL.Pro/ExCom/69/39 and UNEP/OzL.Pro/ExCom/69/39/Corr.1;
  2. With respect to the submission on the administrative costs of the HCFC production sector phase-out management plan (HPPMP) for China by the World Bank, to request:
    1. That information be provided to the 70th meeting on the estimated cost of both the items and the elements in the submission, and the rationale for consideration;
    2. That a report on each item and each element referred to in sub-paragraph (b)(i) above be included in the project completion report (PCR) for the CFC production sector projects to be submitted to the 72nd meeting;
  3. To request the Secretariat to prepare a brief report on the allocation from the polyurethane foam sector to the production sector in the agreement between the World Bank and China for stage I of HCFC phase-out in the polyurethane foam and production sectors for the consideration of the Production Sector Sub-group at the 70th meeting;
  4. That the text informing the Meeting of the Parties of the issue of the eligibility of swing-plants for any additional support for HCFC production phase-out should be considered in the context of the discussion on the report of the Executive Committee to the Meeting of the Parties, which would be considered by the Executive Committee at its 70th meeting;
  5. To approve a total of US $95 million for stage I of the HPPMP for China to meet the freeze and 10 per cent reduction of China’s Montreal Protocol HCFC production baseline, inclusive of all project costs, excluding agency support costs, recognizing China’s need to front-load payments in this sector; on the condition that:
    1. Disbursement of stage I funding will be US $24 million in 2013, US $23 million in 2014, US $24 million in 2015, and US $24 million in 2016; and the 2014-2016 funding will be released only after verification of prior year data;
    2. Total compensation for the entire China HCFC production sector does not exceed US $385 million, inclusive of all project costs, excluding agency support costs;
    3. The total amount of phase-out to be achieved by the project is based on the verified 2010 ODS production data of: 310,000 metric tonnes of HCFC-22, 98,711 metric tonnes of HCFC-141b, 33,957 metric tonnes of HCFC-142b, 2,819 metric tonnes of HCFC-123 and 401 metric tonnes of HCFC-124;
    4. Production lines producing only HCFCs for controlled uses will be closed and dismantled;
    5. China agrees to retire an additional 24 per cent of production capacity beyond the tonnages in sub-paragraph (iii) above to take into account average utilization of HCFC production;
    6. Funding for stage I of the HPPMP and beyond is used to prioritize total permanent closure and dismantling of HCFC production lines. No compensation will be provided in the HPPMP for the production line in Juhua, which produced CFCs in 2010;
    7. China agrees to ensure that any compensated plant:
      1. Does not redirect any phased out HCFC production capacity toward feedstock, subject to a penalty to be specified in the HPPMP agreement;
      2. Appropriate monitoring and verification of each compensated production line are undertaken to ensure that the production sector agreement is implemented and that redirection to feedstock does not take place;
    8. China agrees to 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;
    9. China agrees to optimize the implementation of the HPPMP in order to minimize environmental and climate impacts as much as possible, including by giving priority to HCFC production closure to achieve HCFC reduction targets set forth in decision XIX/6;
    10. China will ensure that any funds in possession of the Foreign Economic Cooperation Office of the Ministry of Environment Protection will return a reasonable rate of interest, and that any interest will be offset in future tranches; and
  6. To request the Secretariat, in cooperation with the World Bank, to prepare a draft agreement, including a proposal for the agency support costs for the World Bank, for consideration by the Executive Committee at the 70th meeting, taking into account this decision, the CFC production phase-out agreement and the HPPMP draft agreement submitted by the World Bank to the 68th meeting.