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Obama Uses Montreal Protocol To Corner India And China

Nitin Sethi , Business Standard

The Obama administration has built a coalition of countries at multilateral fora such as Montreal Protocol to corner India and China.

A decision by the environment, forests and climate change secretary to not send the top-level negotiating team for a meeting on the United Nations (UN) Montreal Protocol on ozone-depleting substances, to be held in Paris in July, has sent the Indian refrigeration sector scurrying to the national capital to protect its interests.

The sector, growing at a compounded annual rate of about 10 per cent, could take a Rs 90,000-crore hit over a few years if the decisions at the Montreal Protocol meeting go against the red lines drawn by the Union Cabinet, the environment ministry has assessed.

The meeting, scheduled for July 11-17, is to consider whether the sector will be forced to phase out the use of a family of refrigerant gases called hydrofluorocarbons, or HFCs, and replace it with a new set of extremely expensive, patented and not entirely tested gases which, as of now, only a few multinational companies based in the US and Japan produce.

Different associations of the Indian refrigeration sector and industry leaders have sought appointments with the Union minister for environment, forests and climate change, Prakash Javadekar, as well as other senior bureaucrats in the ministry, who decided not to send the negotiators to participate at the Paris meeting.

Officials within the ministry, too, have said sending a relatively low-ranking official who has not dealt with the subject, instead of the officials who have handled Montreal Protocol negotiations since they began, could harm India’s interests.

India faces a tough round of negotiations at the meeting, the officials have said.

US President Barack Obama has made it a priority piece of his climate diplomacy. His administration has pushed India and China hard to accept the changeover at bilateral meetings. In parallel, it has built a coalition of countries at multilateral fora such as Montreal Protocol and the UN climate convention to corner India and China. An attempt by senior US negotiators to get India to sign a bilateral agreement for a phase-out of HFCs was last thwarted by the United Progressive Alliance in 2013, when the external affairs and environment ministries stepped in to block a decision being taken by other power centres in the government.

The Montreal Protocol deals with substances that deplete the ozone layer, mostly refrigerants and solvents. Developed countries began shifting to HFCs from ozone-depleting gases long ago but unwilling to pay poor countries to do this, they instead paid countries such as India the incremental costs to move to another patented, but less costly, family of gases called hydrochlorofluorocarbons, or HCFCs.

These gases harmed the ozone layer less than the original refrigerant gases, but being patented replacements, foreign companies made good profits on the transition. Between 2013 and 2013, Indian companies have been tasked to make yet another technology change to HFCs, used in air-conditioning, refrigeration, cold-chains, fire extinguishers, medical treatment of asthma patients and defence equipment.

A few years ago, it emerged while HFCs did not harm the ozone layer, these added to some global warming, a subject covered by the other global environmental pact – the UN Framework Convention on Climate Change.

Despite the fact that the phase-out of HFCs was not covered under the Montreal Protocol (as these didn’t harm the ozone layer) the US and other developed countries stepped up pressure at these meetings that developing countries such as India and China leapfrog HFCs to another new synthesised set of gases, which were proprietary chemicals of companies such as Dupont, Honeywell and Daiichi Sankyo. The demand for air-conditioning is rising the fastest in China and India. A mandatory transition imposed through the UN Montreal Protocol will create an instant monopoly market for these chemical manufacturers.

But in evaluating its options, the government assessed such a move would not just jeopardise India’s growing refrigeration sector, but also drill a hole in India’s negotiating stance at the UN Climate Convention. Earlier, the Cabinet had decided that India shouldn’t agree such a transition until 2015, by when the new global climate change agreement will be stitched together.

The National Democratic Alliance government hasn’t reversed this Cabinet decision.

Government documents accessed by Business Standard show it based its decision on several reasons. An internal note by the government reads, “Some of the alternatives proposed, especially for mobile air-conditioning (read automobiles) is about 20 times costlier than the gas used currently.” It added, “Such technologies are not only process-patented, but also application-patented by a few US-based global chemical producers. There will be monopoly in the world of these producers.” [….]

At the last round of Montreal Protocol negotiations, it took a hard round of negotiations and lobbying by India and about two dozen other developing countries, including China, to block the US proposal. This has found support from several other developed countries, as well as smaller economies that do not stand to lose economically from it. The Paris round of talks now holds a new challenge for industry, as well as the government.

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