I. Supplemental report of the Technology and Economic Assessment Panel replenishment task force

1. Ms. Shiqiu Zhang, co-chair of the Technology and Economic Assessment Panel (TEAP) Replenishment Task Force (RTF), started the presentation and said that the total estimated funding requirement for the triennium 2012-2014 is likely to be in the range of US$ 460 to US$ 540 million. This amount was based on HPMPs approved through ExCom-64 and on amounts from six scenarios applied for not-yet-approved HPMPs (two HCFC reduction packages and three levels of funded phase-out), plus production closure funding that was assumed to take place in parallel. She mentioned that, for comparison, the funding range estimated in the May 2011 RTF report was US$ 390-477 million, which is approximately US$ 70 million lower.

2. After the Replenishment Report had been published in May 2011 and had been introduced at the thirty first meeting of the Open Ended Working Group (OEWG), a Contact Group was set up at the OEWG to formulate additional requests for a supplementary study. The Contact Group agreed on a list of issues for further study. That list included a request for an update on baselines, an update on HPMPs approved at the sixty forth meeting of he Executive Committee, a study of reduction packages, a revised funding requirement for 2012-2014 and subsequent triennia, details on climate benefits, different funding scenarios for production closure, cost effectiveness aspects and considerations on low-GWP applications, the effect of inflation on Institutional Strengthening and the impact of zero and negative growth for supporting activities. The TEAP and its RTF performed the study August‑September 2011 and submitted the supplement report to UNEP the beginning of October 2011; a brief addendum was subsequently issued the beginning of November.

3. Mr. Lambert Kuijpers continued the presentation and went back to the main points presented in the May 2011 report, which gave a funding range for 2012-2014 as US$ 390-477 million with indicative funding ranges for the two subsequent triennia. In this report production phase-out was assumed to occur in parallel with consumption phase-down (as in the 2008 study). In September 2011, an additional 21 HPMPs were approved at the sixty forth meeting of the Executive Committee in July 2011 at a total cost of US$ 340 million, with 6 HPMPs approved for non-low volume consuming (LVC) countries including China. Parties had requested a study of the impact of funding options for swing plants (which produce about 18% of HCFC-22 produced in parties operating under paragraph 1 of Article 5), as well as an investigation of moving production sector funding tranches to later years. The Task Force had investigated options for three triennia, including the phasing out of 10% of production in 2012-14

4. On baseline data, Mr. Kuijpers said that, as of 1 September 2011, 86 Parties had submitted 2010 data, 59 Parties had not, which included China and India. Of the 86 Parties, 14 Parties were non-LVCs, where 5 had increased consumption levels (as much as 20%) and 9 Parties had decreased consumption levels (as much as 20% less), compared to the year 2009. The Task Force had taken into account all new available data to refine the baseline estimates in the revised funding requirement calculations. Mr. Kuijpers then presented a table with the different funding elements for the period 2011-2014 at a total of US$ 492.73 million, plus the costs for new yet to be approved HPMPs, plus production closure costs. He explained how the calculations were done to come to an estimate of the funding range for the triennium 2012-2014. He also mentioned the production closure costs that need to be brought into the total and said that together, these factors yield a funding estimate for 2012-14 as US$ 460-540 million, where the range for the funding estimate for 2012-14 without production amounts to US$ 276-315 million.

5. The Task Force had done investigations on reduction packages. It noted that the foam percentage in the packages is relatively large, which would lead to “negative” consumption if the same package was used in estimates for subsequent triennia

6. The (new) 55-20-25% package chosen was the basis for the estimates for the two subsequent triennia (in ODP tonnes). Parties requested examination of the impact of the HCFC reductions expressed in Mt CO₂ eq. The baseline consumption equals 782 Mt CO₂ eq./year, where the total LVC and non-LVC HPMP approvals to date represent a reduction of 49 Mt CO₂ eq. per year. The complete Stage I HPMP contribution will be equivalent to a reduction of ~60 Mt CO₂ eq./yr, which is less than 10% of the baseline, because most phase-out is related to HCFC-141b, which contributes much less to GWP reductions than HCFC-22.

7. Ms. Zhang continued the presentation on the estimated funding requirements for 2015-2017 and 2018-2020, which were calculated on the basis of existing commitments, HPMPs, Institutional Strengthening, the funding of supporting activities, commitments of (new) HPMPs for LVCs and production closure costs, the latter of which contribute significantly to the total. For these triennia, new cost effectiveness values were used for Poly urethane foam, for the refrigeration and air conditioning subsector and for extruded polystyrene (XPS) foam. The Task Force estimates assumed that all non-LVCs can request stage II funding.

8. She said that the indicative funding requirement for the triennium 2015-2017 amounts to US$ 479 million for HPMPs, US$ 209 million for production closure plus about US$ 112 million for other elements, giving a total funding requirement: US$ 790 million. She said that the indicative funding requirement for the triennium 2018-2020 amounts to US$ 461 million for HPMPs, US$ 229 million for production closure plus about US$ 107 million for other elements, giving a total funding requirement of US$ 797 million.

9. Mr. Kuijpers said that Parties had requested the investigation of several elements in the production closure costs, including the production costs for each consumption scenario, the examination of approaches for swing plants and the consideration of possible redirection of controlled HCFC production to feedstock production not controlled by the Montreal Protocol. He mentioned that swing plants in Article 5 countries other than China account for 18% of total Article 5 country HCFC production and that for the 2012-2014 triennium, swing plant funding for HCFC-22 phase-out is US$ 17.3-21.1 million. In 2015-2017 and 2018-2020, swing plant funding for HCFC-22 phase-out is US $24 million and US $27 million, respectively. Mr. Kuijpers mentioned that HCFC-22 feedstock production in Article 5 countries has doubled every three years during the last decade. A continuing growth trend would offer the potential for diversion of current controlled use production to feedstock; however, country-level, plant-based technical information on the practicalities of successful diversion was not yet available. He then gave specific funding range values for five production scenarios. Parties had also requested the task force to study the funding amounts for Institutional Strengthening (IS) dependent on inflation percentages. Mr. Kuijpers said that an annual 3% inflation would increase the IS funding for 2012-14 by US$ 1.34 million, on a total of US$ 500 million, and for 2015-17 by US$ 4.32 million, on a total of US$ 790 million. Parties had also asked the RTF to study the impact of 0% and -3% growth on funding for supporting activities. Mr. Kuijpers said that a -3% growth results in US$ 5 million less per triennium for supporting activities, where the normal case results in an increase of about US$ 6 million per triennium.

10. Mr. Daniel Colbourne, member of the Task Force continued the presentation with information on foam and refrigeration and air conditioning cost effectiveness values. He noted that the cost effectiveness for polyurethane foam depended mainly s on chosen HCFC phase-out technology and size of the enterprise and the selection of technology is greatly influenced by the specific polyurethane market subsector and the size of the company to be converted

11. He mentioned that the weighted average for rigid and integral skin polyurethane foam was updated from US$ 6.41/kg to US$ 6.11/kg and that XPS conversion costs and the related cost effectiveness values were updated from US$ 2.56/kg to US$ 4.85/kg. Mr. Colbourne said that the Task Force had not adjusted the cost effectiveness values taking into account economies-of-scale. Improvements over time in cost effectiveness are considered to be 5-50%, with an average of 20%. He noted that this stemmed from more trained personnel and lower refrigerant and component costs, where it is not possible to determine a precise time scale. He also mentioned that the dependence on HPMPs with greater than 10% reduction is difficult to quantify, that global changes are very important and that cost effectiveness values from approved projects cannot be directly applied. For refrigeration and AC, the capital and operating costs had been re-evaluated. Mr. Colbourne stated that the cost effectiveness values from the May 2011 report were adjusted downward on the basis of a revised cost analysis and detailed information from project proposals, resulting in an average value of US$ 8.8/kg, excluding funding increases for low-GWP refrigerants.

12. Mr. Colbourne concluded with a number of summarizing comments. He stated that the spreadsheet analysis has been completely updated for three triennia and that the supplement report contained a separate chapter on production in view of the overall impact on the replenishment. In this context, several approaches are available for funding the production sector with significant differences in funding levels and timing. The production closure funding is up to 30% of total funding when production phase-out is in parallel with consumption phase-out and the lowest replenishment levels result from the choice of a 10% reduction from the production baseline. Mr. Colbourne emphasised that moving tranches of production closure funding to future triennia beyond 2020 does not help to decrease the calculated “triennia funding imbalance”. He also said that approved Stage I HPMPs incorporate a substantial ‘front loading’ of funding for consumption phase-out and that cost-effectiveness values used to calculate the second and third triennia, for stage II HPMPs, are assumed to be lower. He summarised the funding requirements again stating that all parameters together result in a funding of US$ 500 million (+/-8%) funding for the first 2012-2014, US$ 790 million for the second 2015-2017, and US$ 797 million for the third triennium 2018-2020.

II. Nominations for 2012 and 2013 for essential‑use exemptions

13. Mr. Ashley Woodcock, co-chair of the Medical Technical Options Committee, presented the committee’s recommendations on essential use nominations for metered dose inhalers (MDIs) for 2012 and 2013, which remain unchanged from those reported in TEAP’s May Report. He provided an update on a bilateral meeting between China and co-chairs of the Medical Technical Options Committee during the Open-Ended Working Group meeting. Discussions focussed on the importance to China of locally made CFC MDIs containing anti-cholinergics. He explained that the Medical Technical Options Committee was not requested to review its assessment of China’s essential use nomination, and that therefore, the panel maintains its original recommendation that CFCs for inhalers with anti-cholinergics are not considered essential in China because more than one alternative is available, and China’s own phase-out strategy is satisfied. At that meeting it was suggested that China could choose to allocate CFCs for this use within the total allowance approved by Parties. He concluded by congratulating China for approval of the first locally made CFC-free salbutamol MDI in China. He also congratulated the United States for approval of a CFC-free albuterol and ipratropium combination inhaler, which paves the way for a complete and successful transition in the United States.

III. Nominations for 2012 and 2013 critical-use exemptions

14. The co-chairs of the Methyl Bromide Technical Options Committee (MBTOC), Mr Mohamed Besri, Mr. Ian Porter, Ms Michelle Marcotte and Ms Marta Pizano provided a summary of findings of the final assessment of the Critical Use Nominations assessed during the 2011 round as set out in the final report of October 2011.

15. Introducing the issue, Mr. Besri presented a summary of the Methyl Bromide consumption in A5 and non Article 5 countries. He reported that, in 1991, 45,000 t of methyl bromide have been consumed in non Article 5 Parties and for 2013, only 704 t have been requested for preplant soil uses.

16. He explained that in 2011, three Parties, Australia, Canada and USA continue to use methyl bromide for preplant soil uses. He reported that Article 5 party consumption in 2010 was of 3,998 t, and this amount is due for phase out by 2015. This consumption was 25% of the total Article 5 party baseline of approximately 16,000 t.

17. He said that overall, critical use nominations (CUNs) continue to fall from 2010 to 2013 for the remaining four nominating Parties.

18. Regarding the available methyl bromide stocks, he said that Canada, Japan and USA have reported respectively 3.4 t, 6.3 t and 1,803 t. He explained also that MBTOC critical use recommendations did not take stocks into account. He concluded that stocks reported by USA in 2010 are 2.6 times the 2013 US nomination of 692 t.

19. He noted that the US withdrew the research nominations in October as the Party stated ‘it was now possible to conduct the program without a CUE’.

20. Mr. Porter then presented an overview of nominations received for pre‑plant soil use of methyl bromide in 2012 and 2013. Seven nominations remained unchanged from the interim recommendations. MBTOC sought further information on 5 nominations and the US requested further re-evaluation of two nominations. At its second meeting, MBTOC reassessed 6 of the 13 CUNs submitted for the 2013 round. Reassessment of the nominations from Australia and Canada were not required.

21. The committee’s final recommendation was 563.463 t with 78.232 t not recommended.

22. Of the reassessed nominations, four were accepted in full, and the committee noted that the Party stated this would be the last nomination for the four vegetable nominations. MBTOC maintained the interim recommendation for the ornamentals sector as a number of alternatives were still considered effective for a portion of the nomination.

23. MBTOC recommended a reduced amount for strawberry fruit with a majority of members agreeing that the further information provided by the Party for the strawberry fruit nomination in California did not demonstrate that technically and economically feasible alternatives were not available for specific soilborne pathogens, particularly for one region. MBTOC noted that the Party may wish to submit a supplementary bid next round if there is technical justification to show that all available methods of 1,3-D/Pic and Pic, with or without barrier films, are not effective for the circumstances of the nomination. He noted that a minority view was held on this assessment.

24. Recently, Canada advised the Secretariat that it had issued a permit for 1.9 t of MB under the ‘Emergency Use’ provisions of the Montreal Protocol. The Party stated that this was an unused quantity of the 2010 CUE amount approved for strawberry nurseries that was needed in early 2011.

25. Ms. Marcotte, MBTOC Co-Chair, reported that in 2011, MBTOC Structures and Commodities (SC), reviewed six CUNs. Additionally, it reviewed three elements of the US research CUN, although this CUN was later withdrawn by the Party. Flour and cereal mills in Canada and the United States remain the largest CUNs, although these have decreased significantly year over year. Commodities for which Parties have requested MB include packaged rice for Australia, fresh chestnuts for Japan, plus dried fruits (including fresh dates) and walnuts for the US, and Southern dry-cured pork.

26. MBTOC recommended the Canadian and US flour milling CUNs. Canada’s nomination of 7.8 tonnes is a 29% reduction and the US nomination of 25.3 tonnes is a 66% reduction this year. MBTOC acknowledges the difficulties Parties have achieving effective fumigations in their large mills and under the cool temperatures observed during the usual fumigation times. Accordingly, MBTOC provided a special report with guidance about achieving greater efficacy with sulfuryl fluoride treatments.

27. Australia and Japan have indicated to MBTOC that methyl bromide use for rice and fresh chestnuts will cease in 2014. Australia nominated 2.3 tonnes for rice to allow their rice processors time to continue sustainable adoption of alternatives. This was a 35% reduction. Japan nominated a 5% reduction to 3.3 tonnes for fresh chestnuts, allowing Japan time to continued logistical improvements and farmer training programs which MBTOC believes are important for the safe use of the alternative. At the Open Ended Working Group meeting in July, MBTOC reported it was unable to assess the US nomination for dry-cured pork. Later submission by the Party of information about the research and the timing of available data allowed us to recommend the CUN in MBTOC’s October report. There was however a minority view included in the MBTOC report.

28. Marcotte also noted that Decision XVI/4 Annex 16 requires MBTOC to meet twice a year to review CUNs. In view of the on-going lack of funding of members, we request clarification from the Parties to acknowledge that meetings can take place electronically. MBTOC cannot hold face to face meetings unless A(5) and Non A(5) members are funded to attend. MBTOC discusses this matter more thoroughly in its report section on resourcing.

[10] The summaries in the present annex appear as submitted by the presenters, without formal editing.