Decision 95/86

The Executive Committee decided, in determining criteria for funding HFC phase-down in the consumption sector for stage I of Kigali HFC implementation plans (KIPs) in Article 5 countries:

1. To agree to use the cost-effectiveness (CE) thresholds and incremental operating costs (IOCs) specified in the table below for enterprises with HFC consumption greater than 15 metric tonnes in the refrigeration and air-conditioning (RAC) manufacturing sector and for enterprises with HFC consumption greater than 20 metric tonnes in the polyurethane foam sector:

2. To define small and medium-sized enterprises (SMEs) in the polyurethane foam manufacturing sector as enterprises with HFC consumption of 20 metric tonnes or less;
3. To define SMEs in the commercial RAC manufacturing sector as enterprises with HFC consumption of 15 metric tonnes or less, on the understanding that:
   1. The entirety of HFC consumption by the enterprise would be considered, rather than just the consumption of the line or process to be converted;
   2. An enterprise that manufactured more than 40,000 units of equipment per year, irrespective of whether all such equipment was HFC-based, would not be considered an SME for funding purposes;
   3. An enterprise would not be considered an SME if it was owned or partly owned by a multinational corporation, regardless of whether that corporation was owned by an Article 5 country;
4. To agree to provide funding for SMEs of:
   1. 32 per cent above the CE threshold in the table in subparagraph (a) above for RAC enterprises with HFC consumption of 15 metric tonnes or less;
   2. 40 per cent above the CE threshold in the table in subparagraph (a) above for polyurethane foam enterprises with HFC consumption of 20 metric tonnes or less;
5. To agree that enterprises with consumption of less than 1.5 metric tonnes that were part of an umbrella project could receive funding of up to 2.5 times the agreed CE threshold specified in the table in subparagraph (a) above, as long as the overall CE of the umbrella project was no more than 1.5 times the sectoral threshold or the threshold levels specified in subparagraph (d) above if the umbrella project included only SMEs; that the umbrella project included all the remaining enterprises in a sector or subsector for which CE thresholds had been established; and that it was understood that the country concerned would submit no further requests for funding from the Multilateral Fund for any enterprise in that sector or subsector, in line with decision 19/32(a);
6. That when it was clearly demonstrated that low-global-warming-potential (GWP) alternatives with IOCs as indicated in subparagraph (a) above were not feasible, the Executive Committee would consider funding higher than those IOCs within the applicable CE threshold when needed for the introduction of low-GWP alternatives by SMEs, and that, in such cases, the justification for requesting higher levels of IOCs should be clearly documented and presented to the Executive Committee for individual consideration; 

Flexibility in implementation enabling parties to select their own strategies and priorities in sectors and technologies

7. That Article 5 countries would have flexibility to prioritize HFCs, define sectors, select technologies and alternatives, and elaborate and implement their strategies to meet agreed HFC obligations, on the basis of their specific needs and national circumstances, following a country-driven approach;

Cut-off date for eligible capacity

8. That the cut-off date for eligible capacity was 1 January 2020 for those parties with baseline years from 2020 to 2022, and 1 January 2024 for those parties with baseline years from 2024 to 2026;

Second and third conversions

9. To apply the following principles for second and third conversion projects:
   1. First conversions, in the context of a phase-down of HFCs, were defined as conversions to alternatives with low-global-warming-potential (GWP) or zero-GWP by enterprises that had never received any direct or indirect support, in part or in full, from the Multilateral Fund, including enterprises that converted to HFCs with their own resources;
   2. Enterprises that had already converted to HFCs in phasing out CFCs and/or HCFCs would be eligible to receive funding from the Multilateral Fund to meet agreed incremental costs in the same manner as enterprises eligible for first conversions;
   3. Enterprises that had converted from HCFCs to high-GWP HFCs, after the date of adoption of the Kigali Amendment, under HCFC phase-out management plans (HPMPs) already approved by the Executive Committee, would be eligible to receive funding from the Multilateral Fund for a subsequent conversion to low-WP or zero-GWP alternatives to meet agreed incremental costs in the same manner as enterprises eligible for first conversions;
   4. Enterprises that had converted from HCFCs to high-GWP HFCs using their own resources before 2025 under the Kigali Amendment would be eligible to receive funding from the Multilateral Fund to meet agreed incremental costs in the same manner as enterprises eligible for first conversions; and
   5. Enterprises that had converted from HFCs to lower-GWP HFCs with Multilateral Fund support when no other alternatives were available would be eligible to receive funding from the Multilateral Fund for a subsequent conversion to low-GWP or zero-GWP alternatives if necessary to meet the final HFC phase-down step.

Sustained aggregate reductions

10. That the remaining eligible consumption for funding in tonnage would be determined on the basis of the starting point of national aggregate consumption, to be agreed by the Executive Committee, less the amount funded for previously approved projects in future multi-year agreement templates for KIPs;
11. That the formula for determining the starting point and the methodology for determining the reductions from remaining HFC consumption eligible for funding would form part of those guidelines when agreed by the Executive Committee;

Eligible incremental costs 

Consumption manufacturing sector

12. To make the following categories of costs eligible for funding and to include them in the cost calculation associated with the phase-down of HFCs in the consumption manufacturing sector:
    1. Incremental capital costs;
    2. Incremental operating costs for a duration to be determined by the Executive Committee;
    3. Technical assistance activities;
    4. Research and development, when required to adapt and optimize alternatives to HFCs with low-GWP or zero- GWP;
    5. Costs of patents and designs, and incremental costs of royalties, when necessary and cost-effective; and
    6. Costs of the safe introduction of flammable and toxic alternatives; 

Production sector 

13. To make the following categories of costs eligible for funding and to include them in the cost calculation associated with the phase-down of HFCs in the production sector:
    1. Lost profit due to the shutdown/closure of production facilities and to production reduction;
    2. Compensation for displaced workers;
    3. Dismantling of production facilities;
    4. Technical assistance activities;
    5. Research and development related to the production of low-GWP or zero-GWP alternatives to HFCs with a view to lowering the costs of alternatives;
    6. Costs of patents and designs or incremental costs of royalties;
    7. Costs of converting facilities to produce low-GWP or zero-GWP alternatives to HFCs when technically feasible and cost-effective;
    8. Costs of reducing emissions of HFC-23, a by-product of the production process of HCFC-22, by reducing the HFC-23 emission rate in the process, destroying it from the off-gas, or by collecting and converting it to other environmentally safe chemicals – such costs should be funded by the Multilateral Fund to meet the obligations of Article 5 Parties specified under the Kigali Amendment;
14. That the Sub-group on the Production Sector would consider compensation for compliance-related control obligations for the production sector on a case-by-case basis once official reporting of HFC production had been submitted by Article 5 countries; 

Refrigeration servicing sector 

15. To make the following categories of costs eligible for funding and to include them in the cost calculation associated with the phase-down of HFCs in the refrigeration servicing sector:
    1. Public awareness activities;
    2. Policy development and implementation;
    3. Certification programmes and training of technicians on safe handling, good practices and safety in respect of alternatives, including training equipment;
    4. Training of customs officers;
    5. Prevention of illegal trade of HFCs;
    6. Servicing tools;
    7. Refrigerant testing equipment for the refrigeration and air-conditioning sector;
    8. Recycling and recovery of HFCs;
16. That, in relation to the level and modalities of funding for HFC phase-down in the refrigeration servicing sector, funding would be provided in line with decision 92/37, contained in annex LVI to the present report;

Eligibility of Annex F substances subject to high-ambient-temperature exemption

17. That amounts of Annex F substances that were subject to the high-ambient-temperature exemption were not eligible for funding under the Multilateral Fund while they were exempted for that party.