Ozone Treaty Could Reverse HFC Incentives

by | Jun 21, 2010

Talks on an ozone treaty in Geneva could result in a reversal of financial incentives for businesses that produce hydrofluorocarbons (HFCs), according to a report in the Associated Press.

The talks concern the 1987 Montreal Protocol, which encourages the use of HFCs to replace chlorofluorocarbons (CFCs) as a more ozone friendly alternative. The U.N. and World Bank jointly administer a worldwide fund that spends $150 million on companies that work toward replacing CFCs with hydrochlorofluorocarbons (HCFCs) which then decompose into (HFCs).

However, both CFCs and HFCs are powerful greenhouse gasses, according to report, up to 10,000 times more effective than carbon dioxide at trapping solar heat.

But greenhouse gasses are covered by a separate treaty, the Kyoto treaty. Under that treaty, which recognizes the greenhouse potential of HFCs, companies are paid to capture and incinerate the HFC byproducts they produce. As a result, companies can reap up to $100,000 per ton of HFC they capture and incinerate, giving them an enormous incentive to produce the byproduct in the first place, just to give themselves an opportunity to incinerate it.

The new proposal, pushed by Canada, the U.S. and Mexico last week, would have the Montreal Protocol take responsibility for the climate change aspect of HFC production in order to reverse the financial incentive for their production. According to a New York Times article, companies are now designing their businesses around the production of excess HFCs in order to gain the credit for later destroying them. The Times reported that production of HFCs has nearly doubled to 7,000 tons from 3,000 – 4,000 before the current system was put in place.

China and India are both opposed to the rules change, which has paid out an estimated $5 billion for HFC destruction.

HFCs are commonly used as a refrigerant. Coca-Cola has recently committed to phasing out the use of HFCs in its vending machines.

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