C O N T E N T S 4 FOREWORD 6 THE GLOBAL ENVIRONMENT AND THE MONTREAL PROTOCOL 12 THE WORLD BANK AND THE MONTREAL PROTOCOL 24 THE WORLD BANK ­ CHILE MONTREAL PROTOCOL PROGRAM 29 THE WAY FORWARD Rural livelihoods: ozone depletion puts pastoralists and other outdoor workers at risk 3 F O R E W O R D W hen the Government of the Republic of Chile innovative grant auction project that evolved during and the World Bank agreed to form a partner- the program, led to the direct elimination of about 494 ship in 1994 to help meet Chile's obligations ODP tons of ozone-depleting substances from Chile's as a Party to the Montreal Protocol, we foresaw that economy. This report summarizes that success story. greater strength would flow from our joint efforts. Chile early understood the importance of ozone pro- It has become clear that global environmental issues tection because of her geographic proximity to the cannot be dealt with by each country or each agency "ozone hole" where increased ultraviolet radiation can working in isolation. Coordination and collaboration cause severe damage to all forms of life. Here the link- are essential, and here multilateral institutions play a age between the well-being of all of Chile's people and crucial role. The greatest potential in the Bank's protection of the environment is transparently clear. Montreal Protocol Program lies in its ability to shape ideas, influence reforms, and leverage the financing of We are deeply concerned about the depletion of the new endeavors. The Montreal Protocol Program is an stratospheric ozone layer that protects all life on our example that could serve as a model for cooperation planet. We want to ensure that potential catastrophic between the Bank and its partner countries in fulfilling effects on human health, crops and fisheries, animal common goals on other critical global environmental and plant populations, and ecosystems never come issues, contained in the Bank's Environment Strategy. to pass. The only way to restore the ozone layer is for all countries to act upon their Montreal Protocol There is no further doubt that the future of humani- commitments. ty is linked to the integrity of Earth's natural sys- tems. By working together to ensure the sustainabili- Chile has been successful in complying with the ty of these natural systems, we leave the living legacy Montreal Protocol phase-out schedule for ozone- of a viable planet that is our bridge into the future. depleting substances. Chile met the freeze in con- sumption 2 years early, and is also reaching the 50% reduction level 2 years ahead of schedule. Full compli- ance will be certain as remaining issues such as regula- Gianni López Ramírez Ian Johnson tion are addressed. The success of the joint World Executive Director, Chilean National Vice President, Environmentally & Commission for the Environment Socially Sustainable Development Bank ­ Chile Montreal Protocol Program, and the CONAMA Network, The World Bank 4 T H E G L O B A L E N V I R O N M E N T A N D T H E M O N T R E A L P R O T O C O L The Ozone Layer kilometers (11 miles) above Earth let-B radiation is damaging to and extending upwards to about almost all forms of life. Excessive The earth's atmosphere is a sur- 50 kilometers (30 miles), and ultraviolet-B radiation is well rounding mantle that generates therefore called the "ozone layer." known to cause human health the global climate and shields the Although ozone is also found at problems such as skin cancers, earth's surface from harmful ground level, its presence there eye cataracts, and weakening of radiation emanating from the sun results from human activities the immune system; it also results or other sources in space. Ozone, such as burning fossil fuels and it in smaller crop yields and dam- a form of oxygen with three becomes a part of harmful pollu- age to plant genetic material, atoms instead of the usual two, is tion such as smog. damage to marine ecosystems, a rare but critical component of reduced fishery yields, and ani- the atmosphere's stratosphere The stratospheric ozone layer is mal health problems. The ozone region. important because it protects life layer absorbs almost all most on Earth from short-wavelength ultraviolet-B radiation, and com- Approximately 90% of all ozone ultraviolet radiation produced pletely screens out ultraviolet-C in the atmosphere is found in the by the sun. Solar ultraviolet-C radiation, thus shielding the stratosphere, beginning about 18 radiation is lethal, and ultravio- earth's surface. Threats to the Ozone Layer Ozone distribution in the atmosphere Certain man-made chemicals 80 MESOSPHERE containing chlorine or bromine 60 STRATOSPHERE are capable of destroying stratos- pheric ozone by means of chem- 40 ical reactions that break down TROPOSPHERE 20 ozone molecules. Although these Km Ozone Partial Pressure 0 50 100 150 (nb) chemicals are stable near the ground, when they rise in the 6 The earth is shielded from the sun's ultraviolet-B radiation by the ozone layer atmospheric mix they are broken apart by intense solar radiation. Then, chlorine or bromine atoms are freed to react with ozone molecules and destroy them. Over time, as more and more ozone molecules are destroyed in the stratosphere, the ozone layer becomes depleted and loses its protective capability. chlorofluorocarbons (CFCs), carbon tetrachloride and methyl The chemicals that destroy ozone which are used in refrigerators chloroform, which are widely are called "ozone-depleting sub- and air conditioners, aerosol used as solvents in engineering stances" (ODS). Some chemical sprays, solvents, foams, and and manufacturing operations. compounds, such as those con- other applications. CFCs were Carbon tetrachloride has an taining bromine, are more highly discovered in 1928 and have atmospheric lifetime of 42 reactive and destroy ozone faster become widely used in many years. than those containing chlorine. sectors. Many forms of CFC Thus they have greater "ozone- have atmospheric lifetimes of halons, which are bromine- depletion potential" (ODP) rela- over 50 years. containing chemicals used for tive to a fixed reference criterion. fire-fighting. Halon 1301 has The relative ozone-depletion Hydrochlorofluorocarbons an atmospheric lifetime of 65 potential of a particular com- (HCFCs) were initially devel- years. pound can be expressed quantita- oped as CFC substitutes, but tively as "ODP tons." they too have some ozone- methyl bromide, which is used depletion potential. They have mainly as an agricultural pesti- Ozone-depleting substances atmospheric lifetimes of cide and fumigant. Its atmos- ODS include: 1.4­19.5 years. pheric lifetime is 0.7 years. 7 certain other chemicals used to southern areas of Australia and the environment against as solvents, coatings, adhe- and Chile. All of these decreases human activities that modify the sives, foams, process agents, are larger than known long-term ozone layer. It does not contain and sterilants in a variety of natural variations. legally binding targets or con- sectors. trols. Therefore specific strong measures for ozone protection Growing concern Protecting the Ozone Layer: are spelled out in the protocol Concern started in 1970, when the Montreal Protocol and amendments that followed scientists first recognized that soon after. these types of chemicals might International consensus and con- deplete the ozone layer. Scientific certed global action on protection The Montreal Protocol on measurements of the ozone layer of the ozone layer have resulted Substances that Deplete the began in 1957, and have become in landmark international agree- Ozone Layer was adopted in increasingly sophisticated with ments, the Vienna Convention September 1987 and came into ground-, balloon-, airplane-, and and the Montreal Protocol. The force in 1990. It is the legal basis satellite-based instruments. 1985 Vienna Convention for the of global efforts to protect the These measurements have shown Protection of the Ozone Layer is ozone layer by controlling pro- that the ozone layer over the a framework agreement for coop- duction, consumption, and use of middle latitudes (30­60 degrees) eration to protect human health ODS. It originally covered five in both hemispheres has been depleted at an average rate of 4­5% per decade over the period from 1979 to 1994. However, an area of even greater depletion began to appear in the early 1980s--an "ozone hole" resulting from a decline in ozone cover of up to 60% was found seasonally over Antarctica, even extending Magellanic penguins live in the part of Chile closest to Antarctica where ozone depletion can lead to animal health problems 8 CFCs and several halons. A series A computer simulation of the of amendments has been added ozone hole over Antarctica in September 2000 to revise phase-out schedules, introduce other kinds of control measures, and add new con- trolled ODS to the list. The of the fact that they are responsi- Amendments comprise London ble for the majority of total (1990), Copenhagen (1992), emissions over time, and that Vienna (1995), Montreal (1997), they have more financial and and Beijing (1999). Ninety-six technological resources to adopt chemicals are now covered by the alternatives. Montreal Protocol. Parties to the NASA BY Protocol have agreed to reduce Developing countries had a grace PHOTO and then eliminate the use of period of 10 years more than these ODS according to specific developed countries before com- schedules. Recovery, recycling and pliance with Protocol phase-out specifically defined essential uses schedules was required in 1999. mechanisms pay agreed incre- (for example, metered dose In the interim, by 1999 they had mental costs faced by countries in inhalers for asthma) are allowed. to "freeze" both production and phasing out both production and consumption of CFCs at average consumption. Contributions By the end of 2001, 180 countries 1995­1997 levels. With the onset come mainly from developed had ratified the Montreal of full compliance, developing countries. The Multilateral Fund, Protocol. Amendments are ratified countries need to reduce CFCs, created under the Protocol in separately. Approximately two- halons, and carbon tetrachloride 1990, provides technical and thirds of signatories are develop- by 50% by 2005, by 85% by 2007, financial assistance to Article 5 ing countries described in Article and phase them out completely developing countries. Eligibility is 5 of the Protocol, as well as coun- by 2010. Methyl bromide must be determined by consumption of tries with economies in transition reduced 20% by 2005, and less than 0.3 kg per capita of con- (CEITs), while the remainder are phased out by 2015. trolled substances, and by criteria developed countries. of development. An Executive Funding the phase-out Committee representing seven Phasing out ODS Parties to the Montreal Protocol developed and seven developing Developed countries have the also stipulated financial mecha- Parties to the Protocol manages most stringent phase-out sched- nisms to help signatories meet the Multilateral Fund and ules. This is due to recognition their phase-out obligations. These approves project funding. 9 Implementing the phase-out (UNDP), the United Nations second financing mechanism, Four organizations serve as Environment Program (UNEP), the Global Environment Facility implementing agencies for the the United Nations Industrial (GEF), which provides incre- Multilateral Fund: the United Development Organization mental funds for countries with Nations Development Program (UNIDO), and the World Bank. economies in transition to The Bank, UNDP, and UNIDO address ozone protection, as provide technical assistance and well as various other global funding for investment projects to environmental issues. Under the phase out ODS. UNEP's role lies Global Environment Facility, the Multilateralism has been a key in involvement with information World Bank is the only imple- networks, institutional strength- menting agency involved in element in the success of the ening, and country programs. investment projects for ODS Montreal Protocol. phase-out, as well as assistance The World Bank also serves as with technical support and an implementing agency for a capacity-building. 10 World Bank/Montreal Protocol T H E W O R L D B A N K A N D cumulative commitments by sector (1999) T H E M O N T R E A L P R O T O C O L Sterilants Solvents US$0.40 Aerosols US$12.31 Refrigeration US$12.46 Foams US$183.13 US$79.92 Fumigants US$0.37 Halons The World Bank Montreal transition have reduced con- US$36.47 Protocol Portfolio sumption of ODS by over 90%, Multisector US$3.82 thus meeting their current obli- Production Other US$32.84 Process Agents US$5.93 The World Bank plays a major gations under the Protocol. US$0.37 role in assisting countries to meet their national requirements As of mid-2000, the Bank had World Bank/Montreal Protocol as Parties to the Montreal committed approximately cumulative commitments by region (1999) Protocol. The Bank's Montreal US$360 million of Multilateral Protocol program is now in its Fund resources, representing 41% East Asia US$68.39 China eleventh year. The Bank partners of the global allocated funds for US$165.62 Europe & Central Asia US$16.13 with developing countries in its programs exclusively in develop- role as an implementing agency ing countries. for the Multilateral Fund. Countries with economies in Latin America transition can be funded through The Multilateral Fund Africa US$58.77 US$0.68 the Global Environment Facility, Middle East US$8.55 but are ineligible to receive The Multilateral Fund has been a South Asia US$50.16 grants from the Multilateral key element of the current suc- Fund. In 2000, the Bank had cess of the Montreal Protocol, committed US$125 million of because it assists countries that World Bank/Montreal Protocol Global Environment Facility would not otherwise have the cumulative commitments* and disbursements funds for 11 ozone- technical and financial means 350 protection projects in Eastern necessary to phase out ODS. As 300 Europe and the former Soviet of 2002, the Fund approved near- 250 200 Union. The special initiative to ly US$1.5 billion in funds to 150 close down CFC production in phase out consumption of 100 Russia has been most successful. 221,000 ODP tons through proj- 50 Countries with economies in ects in 131 countries. 0 92 93 94 95 96 97 98 99 Year Commitments (US$Millions) Disbursements (US$Millions) * Commitments are based on World Bank Management approvals accounted for about 82% of the oped in synchrony, so that effec- Cumulative Multilateral Fund approvals and 1.1 million ODP tons of CFCs tive and innovative approaches ODP tons of CFC phased out consumed globally. However, as can evolve. Information and tech- 150000 1500 industrialized countries phased nology transfer is facilitated by 125000 1250 out ODS under their stricter the Bank to ensure that expertise CFC 100000 1000 of Montreal Protocol schedule, devel- and new methodology is quickly 75000 750 Million onnesT oping countries continued pro- available to partner countries. 50000 500 US$ ODP duction as allowed during their 25000 250 "grace period." By 1999, the time Some of the program innovations 0 0 91 92 93 94 95 96 97 98 99 the Protocol stipulated for devel- so far include: Year Cumulative ODP Tonnes Cumulative Funds Approved oping countries to freeze ODS production and consumption lev- umbrella grant agreements, els, developing countries account- which are time-saving frame- ed for 84% of the 150,000 ODP work agreements that allow ODP tons to be phased out under the tons of CFCs consumed globally. Multilateral Fund funds to be Multilateral Fund, and the World Bank's transferred to eligible countries obligation and achievement as of 1999 without repeated processing The World Bank Montreal for individual, smaller grant 1,000 tonnes 200 Protocol Program projects. Brazil was the first Total ODP to be To be phased-out phased-out under the MLF by the World Bank under the MLF country to sign an umbrella 150 The Bank's Montreal Protocol agreement, followed by 23 100 100% Operations Unit uses a flexible, more countries as of mid-2000. 63% 50 country-driven partnership 79% of World Bank 79% ODP obligation approach that depends on the sector-wide phase-out,an achieved as of 1999 0 needs and requests of each coun- approach that combines com- try. The Montreal Protocol pro- prehensive policy measures gram relies entirely on national with financial incentives to Under the Multilateral Fund, the execution of phase-out programs. help all enterprises in a given World Bank has been working in First, the Bank helps client coun- sector convert to alternative partnership with the developing tries set up institutional frame- technologies that do not countries that now account for works for country programs to involve ODS. For example, more than three-quarters of the support project implementation, China, in partnership with the global consumption of ODS. In strengthening local institutions. Bank, has phased out the use 1986, before the Montreal Operational policies, guidelines of CFCs in the entire national Protocol, industrialized countries and investment projects are devel- mobile air-conditioning sector, 12 production phase-out initiatives, Developing countries are crucial for the which target ODS production Montreal Protocol's continued success in The Bank's Montreal directly. China has been award- the future ed US$150 million, Argentina Protocol program has A critical requirement for the Protocol's future success is US$8.3 million, and India phase-out of ODS by the developing countries. For example, facilitated phase-out of US$82 million, in Multilateral three developing countries alone, Brazil, China, and the over 122,100 ODP tons Fund funds to close down CFC Republic of Korea, accounted for more than 50% of devel- with over 372 projects production during the coming oping-country CFC consumption in 1999. The two largest-- reaching completion in decade. When the target 71,000 China and Brazil--are World Bank client countries. The ODP tons are phased out, 20 countries. This is Bank's Montreal Protocol program has also been working these projects, along with a actively with five of the other seven developing countries nearly 70% of the total Bank-implemented Global that accounted for a further 25% of CFC consumption in amount to be phased Environment Facility project in 1999--Argentina, Mexico, Thailand, India, and Indonesia. out under the Russia, should eliminate over Multilateral Fund--with 72% of CFC production in developing countries and Developing countries are critical to the future only 40% of the success of the Montreal Protocol countries with economies in resources available for transition. investment projects. leveraging funding,which allows concessional lending combined with grants from the Multilateral Fund. For exam- as well as production and con- ple, the Chiller Replacement sumption of halons. Program in Thailand involves an initial grant to establish a market-based instruments, revolving fund for replacing 24 which increase cost-effective- old CFC-type chillers with ness of phase-out projects. For energy-saving, alternative example, in Chile, the Bank refrigerant technology. The provided assistance for a grant savings expected to be earned auction mechanism in which by the new chillers will then be private companies bid on co- used to leverage additional financing grants for conversion funds to purchase over 500 to alternative technologies. more non-CFC chillers. Production of CFC Success of the Montreal Protocol so far (As reported to Ozone Secretariat, UNEP) 1200000 Between 1986 and 1999, the total global consumption of CFCs was reduced from 1.1 1000000 million tons to 150,000 ODP tons. 800000 onesT 600000 What would have happened if the Montreal Protocol did not exist? Calculations ODP 400000 show that without the Montreal Protocol, global consumption of CFCs would have 200000 reached about 3 million ODP tons in 2010 and 8 million tons in 2060. By 2050 ozone 0 86 88 90 92 94 96 98 Year depletion would probably have been about 10 times worse than current levels, with Developing Countries CEIT Industrialized Countries 50% depletion in the northern middle latitudes and 70% depletion in the southern middle latitudes. This level of ozone depletion could potentially have This scenario will hopefully remain in the Consumption of CFC doubled, and in some Southern (As reported to Ozone Secretariat, UNEP) Hemisphere areas such as Chile realm of the theoretical. quadrupled, the amount of ultraviolet-B If the Montreal Protocol 1200000 radiation reaching the earth's surface. is fully implemented by 1000000 The potential human health problems all Parties, scientists 800000 associated with this decrease in ozone onesT predict that the ozone 600000 could have been staggering--an esti- ODP layer should return to 400000 mated 20 million more cases of cancer 200000 normal around 2050. and 130 million more cases of eye 0 86 87 88 89 90 91 92 93 94 95 96 97 98 99 cataracts. In addition, catastrophic con- Year Developing Countries CEIT Industrialized Countries sequences would likely have followed due to severe biological damage to crop systems and other terrestrial ecosystems such as forests and grasslands; marine and freshwater ecosystems and fisheries; and wild and domestic animal populations. The World Bank's Environment Strategy The World Bank's success as a precedent and a mandate for a ozone depletion, Montreal Protocol implementing broad role on a number of global climate change, agency addressing the global issue environmental issues. These of ozone depletion has provided a issues are: loss of biological diversity, 14 deforestation, degradation of water resources, and desertification. The Bank's Environment Strategy is a framework for focusing Bank interventions in three main areas of action: integrating environmental considerations into strategies and actions for poverty reduction, establishing public policies that enable sustainable eco- nomic growth led by the private sector, and addressing regional and global environmental challenges. The Bank's experience with the Montreal Protocol has shown a way forward for solutions to glob- al environment issues that are critically important to the Bank's mission of poverty reduction and sustainable development. Preventing degradation of water resources is a critical global environmental issue W O R L D B A N K ­ C H I L E M O N T R E A L P R O T O C O L P R O G R A M Why Chile? countries to ratify the Montreal ing out about 494 ODP tons, Protocol, on March 26, 1990. Chile will meet the 50% reduction Because of its geographic location Ratification of the London, target in 2003 rather than 2005. in the Southern latitudes where Copenhagen, Montreal and The amount defined as baseline the ozone layer has thinned most Beijing Amendments followed. consumption for purposes of the severely, Chile quickly recognized Montreal Protocol freeze, which the urgency of global ozone pro- Due to an extremely successful tection. Chile was one of the first Montreal Protocol program phas- Southern Chile lies under the Antarctic ozone hole 16 took effect in 1999, was 828 ODP Latin American Regional Consumption of CFC in Chile relative tons (the average annual con- Context to MP phase-out schedule sumption from 1995 to 1997). 1000 Chilean CFC consumption has Eighteen other Latin American 900 been well below the freeze level 800 countries in addition to Chile 700 since 1997, which was 2 years ear- have ratified the Protocol and 600 tons 500 lier than required by the Protocol. various amendments. Most coun- ODP 400 300 tries in Latin America have start- 200 100 Although Chile has only a small ed implementing CFC phase-out 0 88 90 92 94 96 98 00 02 share in the regional and global programs. Consumption is the Year CFC consumption Baseline (1995­1997) markets for ODS, that share is main issue, because production 50% reduction (2005) 85% reduction (2007) thoroughly intertwined with its in the region is limited. economy, exports, and rural livelihoods. For example, in a CFC consumption maritime country such as Chile, In Latin America, most countries ditioning (13%), and foams and fisheries are an important aspect are consumers of ODS. In 2000, aerosols (8%) sectors. CFC-11 of the local economy as well as global consumption of CFCs was accounted for 29% (5,970 ODP the export trade. The refrigera- 139,041 ODP tons, approximately tons) of Latin American CFC tion needed to keep fish fresh 15% of which was consumed in consumption, used primarily for relied on ODS. Many agriculture Latin America. The six major foams and aerosols (81%). and forestry products are also Latin consumers--Brazil, Mexico, exported, and require refrigera- Argentina, Colombia, Venezuela, CFC production tion, or fumigation and treatment and Chile--accounted for 14% of Latin America has limited CFC that may involve methyl bromide, the total global consumption in production facilities in the another ODS. 2000. Brazil was the largest con- region. In 2000, global produc- sumer, with 9,275 ODP tons, and tion of CFCs was 133,670 ODP The strong national determina- Mexico was second with 3,060 tons, 10% of which was produced tion to phase out ODS, and the ODP tons. in Latin America. Only three outstanding success of the Chile countries in the region produce Montreal Protocol Program, Roughly 93% of all CFCs con- CFCs--Argentina (24%), Mexico including the innovative grant sumed in Latin America in 2000 (59%), and Venezuela (18%), auction project that evolved as a were CFC-11 and CFC-12. CFC- Brazilian production facilities market-based tool, make Chile's 12 accounted for 64% of the total closed in 1999, contributing to a Montreal Protocol program story 13,526 ODP tons consumed in 63% decrease in regional produc- significant. the refrigeration (78%), air con- tion by 2000. 17 The preferred substitutes for Chile's Context CFC Demand Projections for Latin America CFCs in Latin America are 30000 HCFCs and hydrofluorocarbons Chile is a consumer rather than a 25000 (HFCs). Global demand in 2000 producer of ODS, mainly CFCs. (MT) 20000 for HCFC-22 was 375,000 metric These are widely used in various 15000 tons, of which Latin America con- Demand aspects of refrigeration such as in 10000 CFC sumed 4.6% in refrigeration and the fabric of rigid foam panels. 5000 air conditioning applications. Refrigerants play an important 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Global demand for HCFC-141b role in processing of natural Allowable Projected was 130,000 metric tons, with products such as fish, livestock 14% consumed in Latin America, Source: CFC Markets in Latin America, LCR Sustainable Development Working Paper No. 14 and agricultural produce. In entirely for foams applications. 2000, Chile consumed 576 ODP Global consumption of HFC- tons of CFCs, which was 2.8% of Phasing out CFCs 134a was 135,000 metric tons in Latin American regional con- Due to phase-out programs in 2000, of which Latin America sumption. Nearly all of these most Latin American countries, consumed approximately 5%, pri- were CFC-11 and CFC-12. Chile regional consumption of CFCs marily for refrigeration and the imports most CFCs from Mexico, declined from 31,130 to 20,927 remainder for air conditioning. and smaller amounts from ODP tons, over the period 1995­2000. Latin America was already well below its allowable consumption level in 1999. Most countries now have con- sumption levels appropriate to meet the upcoming 2005 CFC reduction target, which is set at 50% of their baseline. Regional consumption is expected to fall to about 13,000 metric tons by 2003. Refrigerants are necessary to keep fish and seafood fresh 18 Argentina and Venezuela. Chile than 10 tons per year for the two Chile's Consumption of CFC by Sector (ODP tons) produces no CFCs. products combined, while the use of halons has been virtually Air Conditioning 18 Few other ODS are used nation- phased out. Chile is currently the Refrigeration 177 ally. Consumption of the solvents sixth largest regional consumer of methyl chloroform and carbon methyl bromide--470 metric tetrachloride has decreased over tons in 2001--approximately the past decade and is now less 80% of which is used for agricul- Foam Solvents 312 20 Sterilants 20 Aerosols 7 Montreal Protocol program regional overview The World Bank's global Montreal Protocol commitments totaled US$368.3 million as of 2000, of which 16% represented commitments in the Latin American region. The tural purposes, especially soil Bank's Montreal Protocol program partners with eight Latin American countries-- sterilization in the production of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Uruguay, and Venezuela. This tomatoes, peppers, and other includes all the major regional producers and consumers of ODS. Country Montreal crops; and as a quarantine treat- Protocol programs involve a combination of components including capacity-building ment for fruits, vegetables, and and training, technical assistance, public awareness, and investment projects for wood products. The Montreal conversion to non-ODS technology. Protocol compliance schedule requires methyl bromide to be The Bank's strategy for Montreal reduced 20% by 2005, and Protocol activities involved targeting The program goal is phased out by 2015. high-visibility large enterprises first. complete regional These were easily identifiable and led phase-out of ODS by Chile uses the CFC substitutes to rapid, cost-effective phase-out. For 2010 prevalent in the region. In 2000, example, Brazil closed its CFC produc- Chile consumed about 4% (691 tion facilities permanently in 1999, metric tons) of the regional contributing to a 63% drop in regional share HCFC-22; approximately production between 1995 and 2000. Current focus entails a National CFC Phase-out 1% (188 metric tons) of the Strategy for each country to identify all projects needed to meet final phase-out-- regional share of HCFC-141b; especially users in the refrigeration sector, small and medium enterprises that need and approximately 1.5% (101 technical help, and remaining regional production facilities. metric tons) of the regional share of HFC-134a. 19 Chile Montreal Protocol implemented programs in Latin TECFIN I was funded at a total Program Highlights America. cost of US$1.2 million. An Ozone Technical Unit was established in The World Bank and Chile began An initial 3-year pilot phase National Commission for the their partnership Montreal (TECFIN I) was followed by Environment. Protocol program in 1994 to help ongoing full implementation in Chile meet its national phase-out Phase II. The pilot phase included During the pilot phase, an inno- obligations. The Chile program components of capacity building vative auction mechanism was constitutes approximately US$6.5 and training, as well as awareness- developed for awarding grants to million in approved funds, about raising, to accompany the techno- help companies convert their 11% of the funds for Bank- logical conversion component. operations to alternative tech- 20 nologies that do not require companies that undertake con- CFCs. The pilot phase started version to non-CFC technology. "The success of the with a main focus on rigid foam For a winning company, the grant Montreal Protocol products for thermal insulation co-finances part of the conver- program in Chile lies in and refrigeration, and refrigera- sion costs while the company tion units for commercial, indus- covers the remaining costs. the confidence of all trial and domestic purposes. Because companies compete for involved participants in Under Phase II, the grant auction limited grants, they have a strong the Ozone Technical system evolved flexibly as a cost- incentive to reduce their conver- Unit, in the existence effective method to phase out sion costs. Before each auction, of clear, transparent ODS in the refrigeration and CONAMA announces the maxi- foam sectors. Phase II also mum amount that can be award- and equal rules for all includes regulatory capacity- ed--for example, US$10--for the participating building and development of each kilogram of CFC eliminat- enterprises, and in a alternatives to methyl bromide. ed by conversion. This amount national strategy for is the "cost-effectiveness thresh- the conversion of Chile's Grant Auction old," which companies try to Mechanism undercut in competitive bid- enterprises. These The Grant Auction Mechanism is ding. The upper limit of the factors resulted in the a market-based method of allo- cost effectiveness threshold is fast execution of cating Multilateral Fund grants to conversion projects and Fish products are one of Chile's in lower than expected main non-mineral exports costs." --Jorge Leiva National Coordinator, Ozone Technical Unit, CONAMA Chile is a maritime country with 4,800 kilometers of coastline Auction winner determined globally by the 118 ODP tons, and eliminated a One of the Montreal Protocol grant auction project winners Multilateral Fund, but locally by further 376 ODP tons after all was Compañía Tecno Industria, or CTI, a Santiago-based CONAMA. The Ozone Team at subprojects in Phase II were company that has manufactured domestic refrigerators for CONAMA organizes the public implemented. In the eight auc- the past 50 years. CTI consumed 156 ODP tons of CFCs in bidding process and then evalu- tions so far, more than 20 enter- 1998, making it the largest commercial refrigeration compa- ates the resulting proposals for prises participated, with a cost to ny in Chile. The plant produced approximately 181,000 units funding eligibility on the basis of the Multilateral Fund of nearly in 1998. CTI won one of the auction bids and received Multilateral Fund requirements, US$2.6 million. Cost effectiveness US$1.17 million from the Multilateral Fund, which co- technical feasibility, and financial has increased steadily--the overall financed 50% of the conversion of plant operations to CFC record of the company. cost-effectiveness threshold per substitutes. Along with funds, the Montreal Protocol pro- Companies receive their grant kilogram of eliminated substance gram provided technical assistance and training to help the funds retroactively after they has dropped from around US$10 company convert. Assistance also included awareness show proof of conversion. to under US$5.3. CONAMA has material to help company employees understand that their consistently achieved national new operations had a broader significance for protecting The auction system has a number cost-effectiveness thresholds that the ozone layer and thus protecting human life and the of advantages: are below the global limit. earth's ecosystems. small and medium-sized The Ozone Seal project enterprises can afford to par- In order to raise public awareness A workman destroys CFC-based equipment as part of ticipate, because cost-effective- of ozone protection and build CTI's conversion to non-CFC refrigerant technology, co-financed under the grant auction project ness targets can be flexible for momentum for Chile's aggressive different-sized companies, CFC phase-out, the program cre- given that larger companies ated an Ozone Seal logo that sig- operate at lower costs nifies ozone-friendly technology. As part of the public awareness Multilateral Fund money is aspect, the Ozone Team launched spent more efficiently, because a public contest in which Ozone competition motivates compa- Seal logo was chosen by a panel UNIT nies to find the most afford- of well-known artists, politicians able conversion technology. and industrialists. Service TECHNICAL providers and products that do OZONE The project has had a major not involve ozone-depleting sub- impact on CFC phase-out. stances may display the Ozone CONAMA BY Through the auction program Seal after they have been certified PHOTO pilot program, Chile eliminated by an independent third-party 22 bromide is widely used as a soil and peppers in agricultural fumigant to control agricultural regions of central Chile. Testing pest pathogens, insects, nema- evaluates the economic and tech- todes, and weeds. It is also used nical feasibility of five approaches: as a quarantine treatment for fruits and vegetables. various seed-bed substrates, Methyl bromide has a high ozone- solarization, depletion potential and is con- trolled by the 1992 Copenhagen steam pasteurization, Amendment requiring 20% reduction by 2005 and then total integrated pest management, The Ozone Seal logo phase-out by 2015. CONAMA has and set a stricter 45% preliminary reduction target by 2006, so it is use of substitute agro- certification company. The pro- urgently necessary to find alterna- chemicals. gram chose a well-known Swiss tive technologies. The Montreal company, SGS Eco Care, to per- Protocol program currently fund- Transfer of successful technology form the certification. ed a demonstration project for will be carried out through Participation in the Ozone Seal testing alternatives in soil treat- awareness campaigns and train- program is voluntary, and ment applications for tomatoes ing of methyl bromide users. requires validation after a certain period of time. Methyl bromide alternatives project Chile ranks sixth among Latin American countries after Mexico, Brazil, Argentina, Costa Rica and Guatemala in consumption of methyl bromide, with 470 metric tons consumed in 2001. Methyl Some of Chile's fruit exports are treated with methyl bromide 23 T H E W AY F O R W A R D Chile's Next Steps pliance with the Protocol's than the Montreal Protocol. The required total phase-out of following steps planned by Chile has already taken major ODS. the Government of Chile, and steps to protect the ozone layer by supported by the Montreal meeting its Montreal Protocol Chile is now planning to imple- Protocol program, will ensure commitments early with success, ment a new phase-out schedule continued compliance with and by promising its future com- with more stringent guidelines Protocol obligations: New laws, regulations and guidelines controlling ozone- depleting substances in Chile will support the new phase- out schedule. Although there is presently no regulation to con- trol trade and use of ODS, the government is reviewing the draft of new legislation. This regulatory framework will include: legal control over the com- merce and use of ODS, with a law phasing out CFC-11 immediately and CFC-12 by 2007; Native wildlife species like guanacos are also at risk from ozone depletion 24 restrictions on the import development of technological- Chile Projected CFC Demand and export of CFCs, as part ly and economically feasible of a Refrigerant alternatives to methyl bromide 900 Management Plan; and is a high priority. 800 700 (MT) 600 500 an import licensing system Implementation of the National 400 Demand to control the use of ODS CFC Phase-out Strategy, which 300 CFC 200 in Chile. contains national and sector 100 0 plans, is needed to meet final 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Reduction by 2005 and total phase-out targets in the Allowable Projected phase-out by 2015 of methyl Protocol compliance period. Source: CFC Markets in Latin America, LCR Sustainable Development Working Paper No. 14 bromide concurrently with Targeting remaining ODS users in the service sector and refrigeration is a high pri- ority. Activities are needed to The Bank's Future Focus identify existing old refrigera- tors, mobile air-conditioning The Bank's Montreal Protocol Chile is well on track units, chillers, refrigeration program will continue to play a to meet its Montreal systems, etc. key role in supporting Chile's Protocol targets with implementation of its next steps outstanding success. Implementation of the for total ODS phase-out. Refrigerant Management Plan, The grant auction which will outline require- On a broader plane, the Bank's project is a major ments for the education and task is how to increase effective- contributor to certification of refrigeration ness in addressing future priori- success--after technicians, and for the main- ties with country partners. The completion, tenance, recovery, and Bank has already laid out the recycling of equipment, is blueprint in its Environment annual consumption needed. Strategy, and is moving to exam- will decrease to ine how it can simplify its coor- approximately 63 tons Technical support and training dination structure and proce- of CFC-11 and 190 for the transition to substitutes dures so that Montreal Protocol tons of CFC-12. is needed in all sectors, espe- activities, as well as activities cially for small and medium related to international conven- enterprises. tions on climate change, persist- 25 Ozone protection affects every person in Chile Protecting the ozone layer means protecting the health of everyone in Chile. Ozone depletion is linked to increasing skin cancer in Chile. New medical research in Chile has shown that the proportion of skin cancer in people less than 50 years old has increased from 12% to 20% in the last 2 years. In addition, by the young age of 18, many adoles- cents have already been exposed to 80% of the safe life- time dose of ultraviolet-B radiation. In Chile's far south, which lies directly beneath the Antarctic ozone hole, doc- tors have recorded a 51% increase in photosensitivity disor- ders over the last 7 years. Chilean biomedical scientists studied occupational health hazards from ultraviolet-B radiation at different areas in Chile. They found that people working at higher altitudes What kind of world will we leave to and in the south were strongly affected. Thus fishermen, the next generations? agriculturalists, and others with rural livelihoods are espe- cially at risk. But the study also found that the most highly carcinogenic wavelengths are more prevalent to the north, ent organic pollutants, and other partners, the Bank can cross-fer- and concluded that ozone depletion is also a threat to human-induced chemical tilize its programs to address the human health in densely populated areas such as Santiago. changes, can be mainstreamed challenges of other critical global into development assistance proj- environmental issues. Its role as ects. Mainstreaming activities an implementing agency of the Ozone depletion affects everyone in Chile could involve integration into the Montreal Protocol Multilateral Country Assistance Strategy, Fund and the Global functional links to development Environment Facility can serve as loan projects, and coordination a precedent and a successful in project processing. model. For example, the Montreal Protocol Operations Unit has By drawing on the vast fund of more than a decade of experience experience and resources con- with implementation of an inter- tained in the organization and its national agreement on a critical global environmental issue. Some Country Assistance Strategy for Chile of the key factors in this success- ful implementation experience are The Country Assistance Strategy (CAS) is the focal instrument in the World partnership, national execution, Bank's dialogue with partner countries in development assistance. It describes flexibility, and innovation. the agreement reached between the Bank and a country government on priorities for Bank development assistance over the next 3 years. The CAS is influenced by The World Bank is uniquely policy dialogue, country economic and sector work, supporting analytical work, positioned to help catalyze the Bank's policies, and project design and financing. changes in partner country envi- ronment policy and practice that Goals of Chile's current CAS are: will not only safeguard the ozone layer, but help to stem climate tosustaineconomicgrowthandsocialprogress, change, loss of biodiversity, deforestation, and land and toincluderuralpopulationsandvulnerablegroups, water degradation. By meeting this challenge, the Bank can tomodernizethestatestructure. make a tremendous contribution toward poverty alleviation and As part of the CAS, the Bank supported integration of environmental concerns sustainable development. through establishment of National Commission for the Environment. The strategy specifically points out the success of the joint Montreal Protocol program as part of CONAMA's action on global environmental issues. Rural livelihoods: horseman with livestock. Further Information Ozone depletion puts rural workers at risk. For additional information on the World Bank's role as an implementing agency of the Montreal Protocol, con- sult the following websites: www.worldbank.org/ montrealprotocol www.worldbank.org/LAC/ MontrealProtocol