56646 CONTENTS 4 FOREWORD 6 THE GLOBAL ENVIRONMENT AND THE MONTREAL PROTOCOL 11 THE WORLD BANK AND THE MONTREAL PROTOCOL 16 THE WORLD BANK ­ CHINA MONTREAL PROTOCOL PROGRAM 31 THE WAY FORWARD 3 FOREWORD T he Government of the People's Republic of China tive sectoral phase-out approach used by the program, and the World Bank agreed to build a partnership will lead to the direct elimination of about 285,000 in 1993 to help meet China's obligations as a Party ODP tons of ozone-depleting substances from China's to the Montreal Protocol. We foresaw that greater economy. This report highlights that success story. strength would flow from our joint efforts. Due to the enormous size of its markets for ozone-depleting It has become clear that global environmental issues substances, China has a central role in ozone protec- cannot be dealt with by each country or each agency tion efforts. working in isolation. Coordination and collaboration are essential, and here multilateral institutions play a We are deeply concerned about the depletion of the crucial role. The greatest potential in the Bank's stratospheric ozone layer that protects all life on our Montreal Protocol Program lies in its ability to shape planet. We want to ensure that potential catastrophic ideas, influence reforms, and leverage the financing of effects on human health, crops and fisheries, animal and new endeavors. The Montreal Protocol Program is an plant populations, and ecosystems never come to pass. example that could serve as a model for cooperation The only way to restore the ozone layer is for all countries between the Bank and its partner countries in fulfilling to act upon their national commitments to ozone pro- common goals on other critical global environmental tection, which are contained in the Montreal Protocol. issues, contained in the Bank's Environment Strategy. China has been successful in complying with the There is no further doubt that the future of humani- Montreal Protocol phase-out schedule for ozone- ty is linked to the integrity of Earth's natural sys- depleting substances. Due to a strong policy-driven tems. Only by working together we will leave a viable program, China met the freeze in consumption in 1999, planet to future generations. and is also reaching the 50% CFC reduction level on March, 2004 schedule. Halon reduction is 2 years ahead of schedule. Full compliance will be certain as remaining issues such as closure of all CFC production facilities, substitution of methyl bromide alternatives, and compliance enforce- Minister Xie Ian Johnson ment are addressed. The success of the joint World Bank State Environmental Vice President, Protection Administration (SEPA) Sustainable Development ­ China Montreal Protocol Program, and the innova- People's Republic of China The World Bank 4 THE GLOBAL ENVIRONMENT AND THE MONTREAL PROTOCOL The Ozone Layer kilometers (11 miles) above Earth radiation is damaging to almost and extending upwards to about all forms of life. Excessive ultravi- The earth's atmosphere is a sur- 50 kilometers (30 miles), and olet-B radiation is well known to rounding mantle that generates therefore called the "ozone layer." cause human health problems the global climate and shields the Although ozone is also found at such as skin cancers, eye earth's surface from harmful ground level, its presence there cataracts, and weakening of the radiation emanating from the results from human activities immune system; it also results in sun or other sources in space. such as burning fossil fuels and it smaller crop yields and damage Ozone, a form of oxygen with becomes a part of harmful pollu- to plant genetic material, damage three atoms instead of the usual tion such as smog. to marine ecosystems, reduced two, is a rare but critical compo- fishery yields, and animal health nent of the atmosphere's strato- The stratospheric ozone layer is problems. The ozone layer sphere region. important because it protects life absorbs almost all most ultravio- on Earth from short-wavelength let-B radiation, and completely Approximately 90% of all ozone ultraviolet radiation produced by screens out ultraviolet-C radia- in the atmosphere is found in the the sun. Solar ultraviolet-C radia- tion, thus shielding the earth's stratosphere, beginning about 18 tion is lethal, and ultraviolet-B surface. Threats to the Ozone Layer Ozone distribution in the atmosphere Certain man-made chemicals 80 MESOSPHERE containing chlorine or bromine 60 are capable of destroying stratos- STRATOSPHERE 40 pheric ozone by means of chem- TROPOSPHERE ical reactions that break down 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 deplet- ed 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 1.4 - cide and fumigant. Its atmos- ODS include: 19.5 years. pheric lifetime is 0.7 years. 7 certain other chemicals used as Protecting the Ozone Layer: are spelled out in the protocol solvents, coatings, adhesives, the Montreal Protocol and amendments that followed foams, process agents, and ster- soon after. ilants in a variety of sectors. International consensus and con- certed global action on protection The Montreal Protocol on Growing concern of the ozone layer have resulted Substances that Deplete the Concern started in 1970, when in landmark international agree- Ozone Layer was adopted in scientists first recognized that ments, the Vienna Convention September 1987 and came into these types of chemicals might and the Montreal Protocol. The force in 1990. It is the legal basis deplete the ozone layer. Scientific 1985 Vienna Convention for the of global efforts to protect the measurements of the ozone layer Protection of the Ozone Layer is ozone layer by controlling pro- began in 1957, and have become a framework agreement for coop- duction, consumption, and use increasingly sophisticated with eration to protect human health of ODS. It originally covered five ground-, balloon-, airplane-, and and the environment against CFCs and several halons. A series satellite-based instruments. These human activities that modify the of amendments has been added measurements have shown that ozone layer. It does not contain to revise phase-out schedules, the ozone layer over the middle legally binding targets or con- introduce other kinds of control latitudes (30­60 degrees) in both trols. Therefore specific strong measures, and add new con- hemispheres has been depleted at measures for ozone protection trolled ODS to the list. The 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 to southern areas of Australia and Chile. All of these decreases are larger than known long-term natural variations. Domestic animals like yaks are also at risk from ozone depletion 8 Amendments comprise London A computer simulation of the ozone hole over Antarctica in (1990), Copenhagen (1992), September 2000 Vienna (1995), Montreal (1997), and Beijing (1999). Ninety-six chemicals are now covered by the Montreal Protocol. Parties to the Protocol have agreed to Developing countries had a grace reduce and then eliminate the period of 10 years more than use of these ODS according to developed countries before com- specific schedules. Recovery, pliance with Protocol phase-out recycling and specifically defined schedules was required in 1999. PHOTO BY NASA essential uses (for example, In the interim, by 1999 they had metered dose inhalers for asth- to "freeze" both production and ma) are allowed. consumption of CFCs at average 1995­1997 levels. With the onset By the end of 2001, 180 countries of full compliance, developing had ratified the Montreal countries need to reduce CFCs, Multilateral Fund, created under Protocol. Amendments are ratified halons, and carbon tetrachloride the Protocol in 1990, provides separately. Approximately two- by 50% by 2005, by 85% by 2007, technical and financial assistance thirds of signatories are develop- and phase them out completely to Article 5 developing countries. ing countries described in Article by 2010. Methyl bromide must be Eligibility is determined by con- 5 of the Protocol, as well as coun- reduced 20% by 2005, and sumption of less than 0.3 kg per tries with economies in transition phased out by 2015. capita of controlled substances, (CEITs), while the remainder are and by criteria of development. developed countries. Funding the phase-out An Executive Committee repre- Parties to the Montreal Protocol senting seven developed and Phasing out ODS also stipulated financial mecha- seven developing Parties to Developed countries have the nisms to help signatories meet the Protocol manages the most stringent phase-out sched- their phase-out obligations. Multilateral Fund and approves ules. This is due to recognition of These mechanisms pay agreed project funding. the fact that they are responsible incremental costs faced by coun- for the majority of total emissions tries in phasing out both pro- Implementing the phase-out over time, and that they have duction and consumption. Four organizations serve as more financial and technological Contributions come mainly from implementing agencies for the resources to adopt alternatives. developed countries. The Multilateral Fund: the United 9 Nations Development Program Development Organization the Global Environment Facility (UNDP), the United Nations (UNIDO), and the World Bank. (GEF), which provides incre- Environment Program (UNEP), The Bank, UNDP, and UNIDO mental funds for countries with the United Nations Industrial provide technical assistance and economies in transition to funding for investment projects address ozone protection, as to phase out ODS. UNEP's role well as various other global envi- lies in involvement with infor- ronmental issues. Under the mation networks, institutional Global Environment Facility, the Multilateralism has been a key strengthening, and country World Bank is the only imple- programs. menting agency involved in element in the success of the investment projects for ODS Montreal Protocol. The World Bank also serves as phase-out, as well as assistance an implementing agency for a with technical support and second financing mechanism, capacity-building. 10 World Bank/Montreal Protocol Cumulative Approvals by Sector by 2003 THE WORLD BANK AND Solvents & Sterilants US$14.2M Aerosols US$14.9M THE MONTREAL PROTOCOL Refrigeration US$208.9M Foam US$123.4M Methyl Bromide US$2.8M Halon US$57.2M Production Other US$120.4M US$44.8M Process Agent Phase-out Plan US$24.8M US$38.5M The World Bank Montreal their current obligations under the Protocol Portfolio Protocol. World Bank/Montreal Protocol Cumulative Approvals The World Bank plays a major role By 2003, the Bank had commit- by Region by 2003 in assisting countries to meet their ted roughly US$650 million of South Asia Middle East and US$105.6M Africa national requirements as Parties to Multilateral Fund resources, rep- North Africa US$1.9M US$15.2M the Montreal Protocol. The Bank's resenting 45% of the global allo- Latin America & Montreal Protocol program is now cated funds for programs, exclu- The Carribbean US$79.1M in its eleventh year. The Bank sively in developing countries. Global US$6.3M partners with developing countries East Asia & Pacific Europe & Central Asia in its role as an implementing US$28.9 US$411.7M agency for the Multilateral Fund. The Multilateral Fund Countries with economies in tran- sition can be funded through the The Multilateral Fund has been a Multilateral Fund Commitments to World Bank Global Environment Facility, but key element of the current suc- for Multi-Year Projects (Approved by 2003) are ineligible to receive grants cess of the Montreal Protocol, Europe & Central Asia US$9M Latin America & Caribbean from the Multilateral Fund. In because it assists countries that South Asia US$10.5M US$124M 2000, the Bank had committed would not otherwise have the US$125 million of Global technical and financial means Environment Facility funds for 11 necessary to phase out ODS. As ozone-protection projects in of 2003, the Fund approved near- East Asia & Pacific US$371.6M Eastern Europe and the former ly US$1.5 billion in funds to Soviet Union. The special initiative phase out consumption of to close down CFC production in 245,000 ODP tons through proj- Percentage of Approved Multi-Year Projects Russia has been most successful. ects in 131 countries. Released to Regions by 2003 Countries with economies in tran- Europe & Central Asia 77.8% sition have reduced consumption Under the Multilateral Fund, the Latin America & Caribbean of ODS by over 90%, thus meeting World Bank has been working in 14.4% South Asia 44% East Asia & Pacific 53.7% World Bank/Montreal Protocol Cumulative Commitments* and Disbursements partnership with the developing First, the Bank helps client coun- 600 countries that now account for tries set up institutional frame- 500 more than three-quarters of the works for country programs to 400 global consumption of ODS. In support project implementation, 300 1986, before the Montreal strengthening local institutions. 200 Protocol, industrialized countries Operational policies, guidelines 100 accounted for about 82% of the and investment projects are 0 1990 1992 1994 1996 Date 1998 2000 2002 1.1 million ODP tons of CFCs developed in synchrony, so that Commitments (US$Millions) Disbursements (US$Millions) consumed globally. However, as effective and innovative * Commitments are based on World Bank Management approvals industrialized countries phased approaches can evolve. out ODS under their stricter Information and technology Montreal Protocol schedule, transfer is facilitated by the Bank developing countries continued to ensure that expertise and new Cumulative Multilateral Fund approvals and production as allowed during methodology is quickly available ODP tons of CFC phased out their "grace period." By 1999, the to partner countries. 250000.0 1500.00 time the Protocol stipulated for 200000.0 1200.00 developing countries to freeze Some of the program innovations ODP Tons of CFC US$ Million 150000.0 900.00 ODS production and consump- so far include: 100000.0 600.00 tion levels, developing countries 50000.0 300.00 accounted for 84% of the 150,000 umbrella grant agreements, 0 0.00 ODP tons of CFCs consumed which are time-saving frame- 1991 1993 1995 1997 1999 2001 2003 Year globally work agreements that allow Cumulative ODP Tons Cumulative Funds Approved Multilateral Fund funds to be transferred to eligible countries The World Bank Montreal without repeated processing Protocol Program for individual, smaller grant ODP tons to be phased out under the projects. Brazil was the first Multilateral Fund, and the World Bank's The Bank's Montreal Protocol country to sign an umbrella obligation and achievement as of 2003 Operations Unit uses a flexible, agreement, followed by 23 1,000 tons country-driven partnership more countries as of mid-2000. 250.0 Total ODP to be To be phased-out by the World Bank approach that depends on the phased-out under the MLF 200.0 under the MLF needs and requests of each coun- sector-wide phase-out, an 150.0 try. The Montreal Protocol pro- approach that combines com- 100% 100.0 gram relies entirely on national prehensive policy measures 63% execution of phase-out programs. with financial incentives to 50.0 79% 79% of World Bank ODP obligation achieved as of 2003 0.0 ness of phase-out projects. For Developing countries are crucial example, in Chile, the Bank for the Montreal Protocol's continued By 2003, The Bank's provided assistance for a grant success in the future Montreal Protocol auction mechanism in which program committed private companies bid on co- A critical requirement for the Protocol's future success financing grants for conversion is phase-out of ODS by the developing countries. For to phase-out of over to alternative technologies. example, three developing countries alone, Brazil, 155,000 ODP tons China, and the Republic of Korea, accounted for more with projects in 20 production phase-out initiatives, than 50% of developing-country CFC consumption in countries. This is which target ODS production 1999, the year of the production & consumption freeze. nearly 63% of the directly. China has been award- The two largest--China and Brazil--are World Bank ed US$150 million, and India client countries. The Bank's Montreal Protocol program total amount to be US$82 million, in Multilateral has worked actively with five of the other seven phased out under the Fund funds to close down CFC developing countries that accounted for a further 25% Multilateral Fund-- production during the coming of CFC consumption in 1999--Argentina, Mexico, with only 44% of the decade. When the target 67,000 Thailand, India, and Indonesia. resources available for tons are phased out, these two projects, along with a Bank- investment projects. implemented Global Environ- ment Facility project in Russia, All CFC production plants in China should eliminate 72% of over- will be closed as part of the all CFC production in develop- production phase-out plan help all enterprises in a given ing countries and countries sector convert to alternative with economies in transition. technologies that do not involve ODS. For example, leveraging funding, which China, in partnership with the allows concessional lending Bank, has phased out the use combined with grants from of CFCs in the entire national the Multilateral Fund. For mobile air-conditioning sector, example, the Chiller as well as production and con- Replacement Program in sumption of halons. Thailand involves an initial grant to establish a revolving market-based instruments, fund for replacing 24 old which increase cost-effective- CFC-type chillers with ener- 13 Production of CFC (As reported to Ozone Secretariat, UNEP) Success of the Montreal Protocol so far 1200000 1000000 Between 1986 and 2002, the total global consumption of CFCs was reduced from 1.1 800000 million ODP tons to 100,000 ODP tons. ODP Tons 600000 400000 What would have happened if the Montreal Protocol did not exist? Calculations show 200000 that without the Montreal Protocol, global consumption of CFCs would have reached 0 about 3 million ODP tons in 2010 and 8 million tons in 2060. By 2050 ozone depletion 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year would probably have been about 10 times worse than current levels, with 50% deple- Developing Countries CEIT Countries Industrialized Countries tion in the northern middle latitudes and Info from MOP Data reports and 1991­2000 compilation 70% depletion in the southern middle latitudes. This level of ozone depletion This scenario will hope- could potentially have doubled, and in fully remain in the realm some Southern Hemisphere areas such of the theoretical. If the Consumption of CFC as Chile quadrupled, the amount of Montreal Protocol is fully (As reported to Ozone Secretariat, UNEP) ultraviolet-B radiation reaching the implemented by all 1200000 earth's surface. The potential human 1000000 Parties, scientists predict health problems associated with this 800000 that the ozone layer decrease in ozone could have been ODP Tons 600000 staggering--an estimated 20 million should return to normal 400000 more cases of cancer and 130 million around 2050. 200000 more cases of eye cataracts. In addi- 0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 tion, catastrophic consequences would Year likely have followed due to severe biological damage to crop systems and other terres- Developing Countries CEIT Countries Industrialized Countries trial ecosystems such as forests and grasslands; marine and freshwater ecosystems Info from MOP Data reports and 1991­2000 compilation and fisheries; and wild and domestic animal populations. gy-saving, alternative refriger- ant technology. The savings The World Bank's issue of ozone depletion has expected to be earned by the Environment Strategy provided a precedent and a new chillers will then be used mandate for a broad role on a to leverage additional funds to The World Bank's success as a number of global environmental purchase over 500 more non- Montreal Protocol implementing issues. These issues are: CFC chillers. agency addressing the global 14 ozone depletion, climate change, loss of biological diversity, 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 con- siderations into strategies and actions for poverty reduction, establishing public policies that enable sustainable eco- nomic growth led by the pri- vate 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 The Montreal Protocol program fits well within sustainable development. the World Bank's Environment Strategy 15 WORLD BANK ­ CHINA MONTREAL PROTOCOL PROGRAM Why China? ucts--for example, rigid foams tion and construction materials; used in domestic refrigerators; and solvents for manufacturing-- With a population of 1.3 billion refrigerants for commercial and was increasing sharply in the people and rapid industrializa- industrial freezers or air condi- early 1990s. After developed tion and urbanization, China's tioning; aerosols for sprays or countries eliminated ODS use in demand for ODS-based prod- paint; fire extinguishers; insula- 1995 under the Montreal 16 Protocol, China became the many livestock products, fish and Consumption of CFC in China Relative to MP world's largest consumer and shellfish, and fruits and vegeta- Phase-out Schedule producer of ODS. bles, which are important in the 80,000 local economy as well as the 70,000 60,000 China ratified the Montreal export trade for one of the 50,000 ODP tons Protocol and London world's largest producers. 40,000 Amendment on June 14, 1991, 30,000 20,000 and the Copenhagen Amendment China's global dominance of pro- 10,000 recently. The Government of duction and consumption in 0 1988 1990 1992 1994 1996 1998 2000 2002 Year China recognized the enormous many ODS sectors, and the suc- CFC consumption Baseline (1995­1999) role that China plays in the global cess of the China Montreal 50% reduction (2005) 85% reduction (2007) success of the Montreal Protocol. Protocol program, with innova- It moved quickly to ban new tions such as the sector approach halon and CFC-aerosol produc- to phase out ODS, make China's tion facilities in 1990 and 1991, Montreal Protocol program story and all new CFC production significant. Production of CFC in China Relative to MP Phase-out Schedule facilities in 1993. Partnership 60,000 with the World Bank Montreal 50,000 Protocol program was approved East Asian Regional 40,000 by the Chinese government in Context ODP tons 30,000 1993. 20,000 Common ODS in East Asia are 10,000 China's economy, exports and CFCs, halons, carbon tetrachlo- 0 1988 1990 1992 1994 1996 1998 2000 2002 livelihoods were closely bound up ride, and methyl chloroform. The Year CFC production Baseline (1995­1999) with its demand for ODS. For Montreal Protocol required 50% reduction (2005) 85% reduction (2007) example, electronics, one of developing countries to freeze China's main exports, used ODS- CFCs, halons, and carbon tetra- based solvents. Large state manu- chloride at average 1995­1997 facturing industries used ODS- levels by 1999, reduce these ODS 2005 and by 70% by 2010, and based process agents. The grow- by 50% by 2005 and by 85% by phase it out by 2015. ing domestic market for vehicles 2007, and phase them out com- increased the demand for CFC- pletely by 2010. Countries are Thirteen East Asian coun- based mobile air-conditioning required to freeze methyl chloro- tries--China, Indonesia, the units. Refrigeration during stor- form at average 1998­2000 levels Republic of Korea, the age or transport was needed for by 2003, reduce its use by 30% by Democratic People's Republic 17 of Korea, Malaysia, Mongolia, both consumption and produc- Global vs. East Asia & Pacific consumption and production of ODS in 2002 Myanmar, the Philippines, tion, mainly for domestic use. Singapore, Thailand, Cambodia, Most East Asian countries are CFC Lao People's Democratic consumers of ODS, and only a 100000 Republic, and Viet Nam--have few are producers. 80000 accepted or ratified the Protocol ODP Tons 60000 45% and various amendments. China CFCs. Due to phase-out pro- 40000 34% dominates the region in terms of grams in most East Asian coun- 20000 0 Consumption Production Global production East Asian production World Bank Montreal Protocol program regional overview CTC 60000 The World Bank's East Asia and Pacific Montreal Protocol Multilateral Fund commit- 50000 ments totaled US$411.7 million as of 2003, of which nearly 74% represented com- 40000 mitments in China. The Bank's Montreal Protocol program partners with five East ODP Tons 30000 Asian countries--China, Malaysia, Indonesia, the Philippines, and Thailand. This 54% 40% 20000 includes almost all the major regional producers and consumers of ODS. Country 10000 Montreal Protocol programs can involve a combination of components, including sec- 0 Consumption Production tor-wide phase-out programs in multiple ODS sectors, investment projects for facility Global production East Asian production closure or conversion to non-ODS technology, institutional strengthening, capacity- building and training, technical assistance, and public awareness. Regionally, roughly 131,000 ODP tons of phase-out have Halons 14000 been committed by 2003, 91% of which 12000 are by China. The program goal is 10000 complete global phase- ODP Tons 8000 76% 58% 6000 The Bank's strategy for Montreal out of ODS by 2010 4000 Protocol activities in East Asia involves 2000 targeting entire sectors, with rapid 0 Consumption Production phase-out planned where substitute technologies are widely available--for example, Global production East Asian production in the aerosol, foam and solvent sectors. Sector programs use national policy meas- ures and financial incentives to achieve national-level reductions and cost-effective Source: Data Annexes from Reports of 14th & 15th Meeting of the Parties of the Montreal Protocol. phase-out. Current Bank focus entails ongoing programs in each country and National Note: Some countries had not reported 2002 figures at the time of publication of CFC Phase-out Strategies identifying all projects needed to eliminate ODS by 2010. reports. 18