December 13, 2002

MEMO TO: Alliance Members

FROM: Dave Stirpe

SUBJECT: Summary of 14th Meeting of the Parties to the Montreal Protocol in Rome

        The combined 14th Meeting of the Parties to the Montreal Protocol and 5th Meeting of the Conference of the Parties to the Vienna Convention was held in Rome, November 25-29. It began with a preparatory segment and concluded with a high-level segment with ministers acknowledging the 15th anniversary of the Protocol, the success in protecting the ozone layer, and the work still to be done to assure compliance and to achieve the goals. Proposals that were introduced in Montreal in July were further considered, finalized, or rejected.

        Items of main concern to the Parties included compliance with the Protocol and replenishment of the Multilateral Fund for the 2003-2005 timeframe. The United States remained very vocal and active in the international negotiations and discussions.

Compliance and Implementation

        Specifically the United States, with endorsement from several other countries, proposed several improvements to the non-compliance review procedure that would have made the Implementation Committee operate more efficiently. They included speeding up the timelines for reporting and making information more available. Many developing countries noted that effort should be placed on helping countries that face compliance difficulties. These countries had to freeze their CFC production and consumption in 1999 at 1995-97 average levels, and phase out by 2010. They noted difficulties in providing data within a shorter time period, as proposed. After much discussion and lack of agreement on many elements, the US, with concurrence from other sponsors, withdrew the proposed decision.

        The work of the Implementation Committee has become more important as developing country obligations have come into effect. The Committee reported on a variety of cases whereby Parties have been placed into noncompliance. Much work needs to be done between the Party, the Committee and the Secretariat to clarify data and reporting. The Parties adopted 24 decisions on compliance issues.

Replenishment

        The Technical and Economic Assessment Panel (TEAP) presented its study regarding replenishment of the Multilateral Fund for Implementation of the Montreal Protocol for the 2003-2005 timeframe. It explained its September supplement to its April report assessing existing and expected agreements for phasing out CFCs and other ODS in developing countries. The supplement took into account the comments of the Parties at the Working Group Meeting in July. The original TEAP conclusion was $548-600 million to replenish the Fund for 2003-2005. The supplement reduced the request to $530.5 - $568 million.

        Many developing country delegates stated that numerous specific needs were not reflected in the study; and therefore greater allowance needs to be made. The group of developing countries as a whole noted that the funding proposal was not sufficient to meet the needs of all the developing countries in meeting the huge challenge of phasing out CFCs and other ODS. They pointed out specific needs that were not taken into account in the study such as public awareness projects, institutional strengthening, curbing illegal trade, training, and capacity building needs. The developed countries stated that they understood the issues raised and would engage in a fruitful discussion to ensure developing country compliance. Parties met in closed session for several days to reach agreement on the ultimate funding.

        Ultimately, the Parties agreed to fund the Multilateral Fund at $573 million taking into account that $23 million would come from interest in the next three years. Many developing country representatives were not convinced that this amount was real. Since there is a carryover of $76 million, new contributions will be only $474 million. (The last triennium was funded at $440 million). The US contribution has been reduced from 25% to 22%. As a result, the US portion has been reduced from the last triennium's funding even though the funding is greater. The US share for the 2000-02 funding was $110 million. The US share for the 2002-05 funding will be $104 million.

Relationship between Montreal and Kyoto Protocols - HFCs

        Over the last five years the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and the Montreal Protocol have sought ways to address the relationship between the two treaties. In 2002 the UNFCCC Parties sought more HFC study from experts and desired a way to allow the Intergovernmental Panel on Climate Change (IPCC) and the Montreal Protocol Technical and Economic Assessment Panel (TEAP) to bring its information on HFCs to the Parties. As a result of long discussions and consultation from TEAP and IPCC experts in June, the UNFCCC Subsidiary Body for Scientific and Technological Advice (SBSTA) invited the IPCC and the TEAP to consider whether it could do a study of the information desired. In October at the UNFCCC 8th Conference of Parties (COP 8), IPCC and TEAP responded affirmatively pending IPCC approval in February 2003. (See Alliance document delhiHFC.doc November 6, 2002).

        TEAP was previously authorized by the Montreal Protocol Parties to work cooperatively with SBSTA. However, the Parties agreed in July to discuss the COP 8 result at the Rome Meeting. They specified that discussion would be limited to considering the request and cooperation between the TEAP and SBSTA.

The European Union (EU) introduced a draft decision that intended to mirror the COP 8 decision by welcoming the upcoming report of IPCC and TEAP and requesting TEAP to work cooperatively. There was general agreement that the report would be useful. The US raised concern only over whether the report should come back to the Parties of the Montreal Protocol for consideration when it is completed in 2005. The EU and others felt that the report should be considered by the Montreal Protocol Parties as well as the UNFCCC; however, the US opposed consideration by the Montreal Protocol Parties. The US stated that HFCs are not addressed by the Montreal Protocol. On the other hand, the EU and others believed that since TEAP was providing assistance - the report should be considered by the Parties to the Montreal Protocol.

        After much debate, there was consensus that the report should be considered by the Montreal Protocol Parties in so far as it relates to actions to address ozone depletion. The decision follows:

Relationship between efforts to protect the stratospheric ozone layer and efforts to safeguard the global climate system: issues relating to hydrofluorocarbons and perfluorocarbons

Welcoming decision X/CP.8 taken by the eighth Conference of the Parties to the United Nations Framework Convention on Climate Change on the relationship between efforts to protect the stratospheric ozone layer and efforts to safeguard the global climate system,

To request the Technology and Economic Assessment Panel to work with the Intergovernmental Panel on Climate Change in preparing the report mentioned above and to address all areas in one single integrated report to be finalized by early 2005. The report should be completed in time to be submitted to the Open-ended Working Group for consideration in so far as it relates to actions to address ozone depletion and the Subsidiary Body for Scientific and Technological Advice of the Convention on Climate Change simultaneously.

        IPCC's Special Report on practices and technologies will assist Parties in making informed decisions when evaluating alternatives to ozone depleting substances while at the same time contributing to the objectives of the UNFCCC and the Montreal Protocol. The aim of the Special Report is to inform industry and policy decision making regarding relevant considerations in choosing among options to replace ozone depleting substances. The choice among options involves a number of environmental, health, safety, and technical performance considerations in addition to consideration of direct and indirect greenhouse gas emissions.

        According to IPCC, for each type of application the Special Report will cover the relevant technical/scientific considerations, including:

• Technical information relevant to the evaluation, including cost, availability, health, environment and safety considerations, technical performance, energy and resource efficiency and all greenhouse gas emissions, using a systematic approach, such as the total equivalent warming impact (TEWI) and all greenhouse gases and Life Cycle Climate Performance (LCCP).
• Technical options to reduce greenhouse gas emissions, e.g. through containment, recovery, recycling, destruction, the use of alternative fluids and not-in-kind technologies. Where appropriate reference should be made to examples of relevant policies and measures.

        An integrated analysis will assess toxicity, atmospheric chemistry effects (e.g., air quality) and potential build up of gases and their degradation products in the atmosphere. Reference could be made to the full range of technical literature as specified in the IPCC procedures on the use of non-peer reviewed literature.

        IPCC recognized that due to the technical nature of the Special Report, participation of the appropriate industry experts (in their personal capacities as experts and not as representatives) would need to be ensured.  Following standard IPCC practices, the best qualified technical experts would be sought across sectors and geographic regions (including, e.g., academia, industry, non-governmental organizations, etc.). Consistent with IPCC procedures, all possible measures would be taken to ensure that the report would be policy neutral and user-friendly.

        TEAP will work and cooperate with IPCC in issuing a single report. TEAP will also carry out an independent study, as requested, on the availability of HFCs in developing countries. All of the work will be completed by 2005.

Illegal Trade in CFCs

        For the 8th year in a row, the Parties addressed illegal trade in ozone-depleting compounds. Draft decisions were based on the Secretariat's comprehensive study prepared pursuant to 2001 and 2002 requests of the Parties. The 44-page study, entitled, "Study on Monitoring of International Trade and Prevention of Illegal Trade in Ozone-Depleting Substances, Mixtures, and Products containing Ozone-Depleting Substances" noted that while the Parties developed many steps to address illegal trade such as import and export licenses, the time was right to examine more ways to address the issue since illegal trade is emerging in all regions. The report can be obtained by the Alliance, or found at www.unep.ch/ozone/oewg/22oewg/22oewg-4.e.pdf.

        The Alliance assisted the authors in preparing the report. It summarized all action taken by the Parties, and proposed a wide range of ideas covering customs codes, labeling, licensing systems, national enforcement and international networks. It also proposed a new enforcement assistance function within the ozone regime, which the US opposed, with the aim of improving coordination, channeling expertise from the enforcement community and providing direct assistance to developing countries.

        Draft decisions addressed many aspects of illegal trade. Poland was working with many Parties to refine a cumbersome proposed decision to urge Parties to undertake many responsibilities. As a result, there was consensus on a decision that encourages Parties to consider means and continued efforts to monitor international transit trade; introduce economic incentives to promote the use of ODS substitutes that do not impair international trade, and make greater use of UNEP regional networks. The decision urges Parties to introduce World Customs Organization recommendations to their national customs classification, requests UNEP to report in 2 years on activities of regional networks in combating illegal trade; provides for illegally-traded quantities not to be counted against a Parties' consumption provided the Party does not place these on their own market, and requests the Multilateral Fund to continue to provide financial and technical assistance to developing countries.

        The European Union proposed a decision entitled, "Consideration of the Use of the Globally Harmonized System for the Classification and Labeling of Chemicals that Deplete the Ozone Layer." It notes there would be value in labeling ODS under the Globally Harmonized System, and providing information with respect to identifying the safe handling of these substances in trade, the workplace and in consumer products. The decision requested the Secretariat to clarify whether ODS can be included in the System and to report to the Parties in 2003.

Destruction

        After reviewing TEAP's destruction report, the Parties addressed the issue in 2002 and adopted a decision that approves several destruction technologies for CFCs, HCFCs, and halons. It requests the TEAP to update, by next year, the Code of Good Housekeeping to provide guidance on minimizing ODS release and environmental impact during operation of the technologies. More work will be conducted in the future years on destruction.

Metered Dose Inhalers (MDIs)

        The Parties adopted a decision on a global database and assessment to determine appropriate measures to complete the transition from CFC MDIs. It requests each Party to submit available information to the Ozone Secretariat by February 28, 2003, and annual updates thereafter on CFC and CFC-free MDIs sold or distributed within the country and CFC and CFC-free MDIs produced within the country for export to other Parties. TEAP will take the information into account when assessing essential use exemptions.

Ratifications

        So far, 185 Parties ratified the 1985 Vienna Convention; 184 have ratified the 1987 Montreal Protocol; 164 have ratified the 1990 London Amendment; 142 have ratified the 1992 Copenhagen Amendment; 86 have ratified the 1997 Montreal Amendment; and 41 have ratified the 1999 Beijing Amendment. In October the US Senate ratified the Montreal and Beijing Amendments, but the State department does not intend to deposit the instruments of ratification with the United Nations until EPA regulations are in place implementing the amendments. The regulations will be finalized soon.

Looking Ahead

        There were no discussions this year concerning the European Union's desire to accelerate the phaseout of HCFCs in developed or developing countries. This discussion has occurred for the last 3 years without adjustment or amendment to the Protocol. However it is expected to be raised again in 2003. Other amendments will be proposed in 2003 as well.

        The Meeting dates for next year have not been set but it appears that the July Meeting may be in Montreal for the third year in a row; and the Meeting of the Parties will be in the fall in Nairobi unless a Party provides an invitation.

Conclusion

        The Parties participated in debates about methyl bromide and its alternatives. While the Alliance does not address this compound, it will impact the Montreal Protocol greatly in the next several years. Two draft decisions on methyl bromide were withdrawn after much debate and lack of consensus. TEAP is preparing a report on methyl bromide alternatives in 2003. According to some, the discussion may be more appropriate next year. Healthy debate continues over whether alternatives are effective.

        A methyl bromide phaseout is scheduled to occur in 2005 with exceptions and exempted critical uses agreed by Parties. The US expects to achieve only a 50% reduction. In January 2003, most countries will ask for 5% critical use exemption for 2005. The US may ask for a 35% exemption. Eventually the US could be out of compliance with the Montreal Protocol if it cannot comply with the methyl bromide phaseout schedule. The farm community has the support of many in Congress to continue methyl bromide use - but noncompliance with the Protocol could have ramifications for the HCFC- and HFC-producing and using industries.

        Sanctions are high for noncompliance with the Protocol. Rights to export HCFCs and crops grown with methyl bromide are at risk. A US failure on the Montreal Protocol has many ramifications, both politically and environmentally. The US cannot afford to burn up the goodwill it has earned with the other Protocol Parties as it promotes HCFC and HFC alternative technologies in the Montreal and Kyoto Protocol processes. The Bush Administration and Congress will continue to hear from the Alliance as to the importance of maintaining compliance with the Montreal Protocol.

        Much remains to be done in order to complete the process and return the stratospheric ozone layer to its pre-hole condition. The US needs to maintain its leadership role in Protocol negotiations and focus attention on its own compliance and the compliance of the developing countries. In order to fulfill its commitments, the Bush Administration and Congress need to fully fund the US commitment to the Multilateral Fund. The US contribution was $36.6 million per year and be lowered slightly for the next three years after replenishment. The US is $29 million in arrears; and the 2003 Bush Administration request was only $32 million, $4 million under the annual commitment.

        The Montreal Protocol is viewed as the model environmental treaty in which nations came together in agreement to address an international environmental problem. While the Kyoto Protocol has undergone considerable scrutiny because of scientific uncertainties, the Montreal Protocol has successfully used scientific certainty to advance environmental protection. The US government's leadership role in recognizing science, phasing out ozone depleting substances, and promoting alternatives has been instrumental in the Protocol's success.