After seven years of negotiations, on October 15, 197 countries reached a historic agreement in Kigali, Rwanda, to amend the Montreal Protocol and phase down hydrofluorocarbons. HFCs are refrigerant gases used for commercial, residential and automotive purposes (and in other applications) but are hundreds to thousands of times more potent that carbon dioxide. They were meant to replace HCFCs in order to protect the ozone layer but their global warming potential (GWP) has increasingly become a matter of concern in climate negotiations. The Kigali Amendment is one that could avoid global warming by up to 0.5° C. What did India gain? What should India do?
The Kigali Amendment is not as ambitious or as flexible as desired. Earlier proposals from North America, Europe and Small Island States had demanded a 2021 freeze date for HFCs for all countries. India wanted a 2031 freeze date. Eventually, developed countries agreed to an earlier baseline (2011-13) and freeze year (2019). For most developing countries (including China), the baseline was set at 2020-22 with 2024 as the year to cap HFC use. But India and a few other developing countries got a later baseline (2024-26) with HFCs freezing only in 2028. By not satisfying all the demands of all the countries, the Kigali Amendment signals a good compromise. But before any blame is attributed (or credit claimed), it is important to understand why India demanded differentiated treatment.
Why latitude for India
India and China are the only developing countries that manufacture HFCs. But China’s output is much bigger given its significantly larger share of the global air conditioner market. Even in 2050, India’s HFC emissions under business as usual would have been 7 per cent of the world total against China’s 31 per cent. Moreover, according to analysis by the Council on Energy, Environment and Water (CEEW), India’s A/C market and HFC consumption picks up only after 2025. So, differentiation with China, which will witness rapid emissions during 2015-2030 (and has to act sooner), was warranted. The deal accounts for differences in current consumption, future growth and overall income levels.
Action prior to 2028 would have imposed additional costs of currently much more expensive alternative refrigerants. In the residential sector, the only viable alternative is propane (R290). The other alternative is R32, although it too has a relatively high GWP of 675. Hydrofluoroolefin (HFO) blends remain expensive. HFO1234yf (an alternative for mobile air conditioning) is anywhere between four and 10 times more expensive than the current gas in use. HFO1234ze, which can be used in some commercial applications, is cheaper but for other types of commercial A/Cs there are no viable alternatives.
The cost burden is not merely of alternative refrigerants but includes the one-time cost of product redesign, servicing equipment, training of servicing personnel, and per unit equipment costs. In the lead-up to the Kigali meeting, a $53-million philanthropic initiative was launched for energy efficiency measures in developing countries as a complement to shifting to HFC alternatives. While welcome, the actual costs of transition would be much higher. A CEEW-International Institute for Applied Systems Analysis study found that for India, economy-wide costs of an HFC phase-down could be €12 billion (sum of undiscounted costs, 2015 prices) under the original Indian proposal and €34 billion under the North American proposal between 2015 and 2050. India wanted extra time until more information became available.
The agreed decision requires the Montreal Protocol’s Multilateral Fund to cover incremental costs related to production, consumption, servicing and patents. But it is unclear how much of the total costs will get covered until the guidance document on calculating costs is prepared.
Another concern for India was access to technology. Many alternative gases are not manufactured in India currently, although firms are moving in that direction. Ideally, if more (patent-free) alternatives emerged, and their prices fell rapidly, India should be prepared to voluntarily begin a phase-down even earlier, despite the later date it has secured in the negotiations.
The other aspect of technology is the need to test alternatives under India’s high ambient temperature conditions. Testing for some chemicals has already begun but further verification was necessary before India could firmly commit. This is one reason why, in September, India announced a domestic, collaborative R&D programme to develop next-generation, sustainable refrigerants.
Gains from Kigali
Overall, India’s primary gain is that it has once again demonstrated willingness to be part of a multilateral climate deal while being able to secure a differentiated outcome for itself. The deal allows India’s heating, ventilation and air conditioning (HVAC) sector to grow while giving time to refrigerant manufacturers to shift to alternatives. Second, a review of technological options is also envisaged so that India is not left stranded in 2028. Third, despite the three baselines, the bulk of global HFC emissions starts getting phased down earlier, delivering a massive gain for the fight against climate change. Fourth, the deal is legally binding, and failure to act could invite non-compliance proceedings, making it a more effective deal than the Paris Agreement on Climate Change.
It is important to recognise how research, analytics and consultations can help to move the needle and change the course of the planet. Until two years ago, India was unwilling to even negotiate HFC phase-down under the Montreal Protocol. Extensive research within India combined with several rounds of consultations between government, industry and civil society helped to prepare the ground for a more informed and proactive approach to the negotiations. The narrative of the global HFC negotiations also shifted, from merely ambition to include economy-wide costs, differentiation, and high growth rates. Rather than rest on negotiated laurels, Indian industry now has to recognise the shifts in global markets, invest in technology and nudge consumer behaviour towards more efficient and less damaging refrigerants. The international result is welcome; attention now shifts to domestic action.
Arunabha Ghosh is CEO and Vaibhav Chaturvedi is Research Fellow at the Council on Energy, Environment and Water.