Subsidies for super greenhouse gas manufacture must be eliminated

Producers should pay for destruction of potent HFC-23 climate gas

LONDON: The Environmental Investigation Agency (EIA) is calling for an end to the expensive United Nations (UN) program costing almost a billion euros a year to capture and destroy the super greenhouse gas HFC-23.

On the eve of an expected decision by the UN’s Clean Development Mechanism (CDM) on HFC-23 methodology, EIA is calling for the methodology to be retired and current contracts for HFC-23 destruction not renewed.

HCFC-22 manufacturers would assume responsibility for destroying the HFC-23 waste gas generated during HCFC-22 production, including the minimal costs for capture and incineration.

Since 2005, Kyoto signatories have spent several billion euros to obtain about 260 million carbon credits (Certificates of Emission Reduction, or CERs) for offsets resulting from HFC-23 destruction projects, mostly in China and India.

However, because revenues from HFC-23 credits are so much greater than the cost of HFC-23 destruction, many manufacturers can earn more from selling HFC-23 credits than from producing HCFC-22. This has created a perverse incentive that encourages manufacturers to produce more HFC-23 than is necessary just so they can be paid to destroy it. It has also subsidized developing nations’ production of HCFC-22, itself a greenhouse gas and an ozone-depleting substance currently being phased out under the Montreal Protocol.

“Rather than being converted to carbon credits, the minimal cost of destroying HFC-23 should be borne by producers,” said Mark Roberts, International Policy Advisor for EIA. “Just as HCFC-22 producers in developed nations bear the cost for HFC-23 destruction, so should China and India, especially as they have already been paid many times over what it will cost to destroy all HFC-23 for decades to come.”

Indian fluorocarbon companies have reported that HFC-23 credits comprise up to 88 per cent of their annual profits (allowing one company to open a nationwide chain of movie theaters). The Chinese government, which levies a 65 per cent tax on all HFC-23 credits, claims to be sitting on US$700 million from HFC-23 offsets, enough to capture and destroy all HFC-23 produced in China until 2050.

“By banning the use of HFC-23 credits after April 2013, the European Union has already demonstrated that these industrial gas offsets have no place in future international carbon markets”, said Clare Perry, EIA Senior Campaigner. “Destroying HFC-23 should be obligatory as part of responsible business practice by all HCFC-22 producers.”

To view or download EIA reports on CDM HFC-23 projects and emissions, visit:

https://eia-international.org/campaigns/global_environment/reports/

Interviews and further comment are available on request. Please contact:

• Clare Perry, Senior Campaigner, on +34 664348821 or
clareperry@eia-international.org

• Natasha Hurley, Campaigner, on +44 (0)20 7354 7960 or
natashahurley@eia-international.org