MLF Activities in response to decisions on funding activities related to destruction

1. MLF Activities in response to decisionson funding activities related to destruction Stephan Sicars, Senior Programme Officer, MLF Secretariat Seminar on the environmentally sound management of banks of ozone-depleting substances Geneve, Suisse, 14 Juin 2010

2. Content • Introduction • Interim Guidelines • Timing and activities • Business plan (2010 – 2012) • Observations from submissions • Conclusion and outlook

3. Introduction • XX/7: Environmentally sound management of banks of ozone-depleting substances • Invite … the MLF … to enable practical solutions … gaining better knowledge … destroying banks, and on costs related to the collection, transportation, storage and destruction … in A5C • Request ExCom to consider … commencing pilot projects that may cover the collection, transport, storage and destruction of ODS • Conformity with national, regional, and/or international requirements (Basel, Rotterdam)

4. Interim guidelines for demo projects for ODS disposal (58) (I) • Define collection, transport, storage and destruction • Collection: Get ODS bottled • Limited number of demonstration projects • No funding for collection, except … to monitor sources • Limited number • Funding for non-LVC max. US $13.2/kg • Halon and CTC: max one project, only if important • Annual report progress & experiences

5. Interim guidelines for demo projects for ODS disposal (58) (II) • Information to be included with project • What exactly is done? • How much ODS? Assurance that objectives will be reached • Synergies? • Detailed description of management and financial set up • Total cost inclusing non-MLF costs and their funding sources; sustainability of business model • Clear indication how to secure other sources of funding • Concept for monitoring the origin of recovered ODS: discouraging virgin ODS declared as used • Can also include other disposal options (recycling and reuse)

6. Timing and Activities of ExCom (I) Timeline: MoP XX / ExCom 57-59 / MoP XIX / ExCom 60-61 • ExCom 57 PRP, 58 guidelines, 59 more PRP • XXI/2: Environmentally sound management of banks of ozone-depleting substances • ExCom to … consider … further pilot projects in A5C … to consider the costs of a one-time window … to address … LVC • ExCom to develop and implement a methodology to verify the climate benefits/costs associated with MLF • Call on Parties + … to consider making additional support available to the MLF for destruction of ODS […]

7. Timing and Activities of ExCom (II) • ExCom 60 • Decision 60/5 (i): Bilateral/implementing agencies to suggest at the 61st ExCom a level of funding for activities in LVC • PRP (approved); Business plan 2010 (not approved) • ExCom 61 • Business plan 2010

8. Business plan - 61st Meeting (I) • 21 demonstration projects • 11 countries • 6 regions/sub-regions • 4 preparation requests w/o later funding • Value • Projects between US $100,000 and US $1.4 million, • Total US $18.7 million • ODS phase-out • Up to 1200 ODP tonnes/project • Total 2685 ODP tonnes • 3 technical assistance projects • 14 PRP requests, 7 regions/sub-regions

9. Business plan - 61st Meeting (II) • Algeria (59) • Bangladesh - TA (-) • Brazil (57) • China (59) • Colombia (59) • Cuba (59) • Ghana (57) • India – Demo + TA (-) • Lebanon (-) • Mexico (57) • Nigeria (60) • Turkey (57) • Regions: • Africa (-) • Asia/Pacific – Demo + TA (57; -) • Eastern Europe, Central Asia (-) • Latin America & Caribbean (-) • Prep w/o BP requests for project funding • Indonesia (57) • Mexico (57) • Philippines (57) • Nepal (59) In brackets: Meeting at which preparatory funding was approved

10. Observations - submissions • Presently 2 project submissions received • Both withdrawn after extensive discussions • One documented for ExCom 60 • Both in conjunction with energy efficiency projects • Both aimed at sustainability beyond MLF support • Not always full understanding of the concept in guidelines: No collection • Timing: • Collection is time critical, destruction less • Gap closed through storage (minimum losses)

11. Observations (II) • Both want to use carbon funding to achieve long-term sustainability • Both face severe challenges in financial set-up: Liquidity • Projects require (more) entrepreneurial thinking • Cash flow analysis – timing of expenditures/income essential • Risk assessment instead • Prioritisation of income maximisation / cost minimisation before technical or regulatory perfectionism

12. Observations (III) • CFC-12 is an asset (max 30 $/kg), CFC-11 less (max 14$/kg) • Combined projects possible, where CFC-11 collection/destruction funded from surplus CFC-12 funding • There will be a race by the private sector to secure CFC-12 banks • In cases where CFC-11 and CFC-12 co-exist in banks (fridges): ExCom will have to decide if to fund into disposal of one (CFC-11) if the other created profits for the private sector (CFC-12) • Incremental cost issue • Given possible income of CFC-12, incremental cost will be often negative, eliminating eligibility • CFC prices for destruction multiple of CFC prices during pre-phase-out period: Attempts of illegal production very likely

13. Conclusion and outlook (I) • Project submissions according to Business Plan • 2010: 12 projects with 2,120 ODP tonnes • 2011: 9 projects with 565 ODP tonnes • Implementation time frame: Typically 2 years

14. Conclusion and Outlook • Two different approaches • Countries having surplus ODS already collected (no submission yet) • Limited amounts for most countries • Regional projects expected • Some countries have major ODS banks • Possibly not eligible for carbon funding • Countries having collection efforts ongoing • Energy efficiency projects • Quantities larger • What will happen to CFC-11? • Carbon market funding for collection / sustainable destruction: Severe liquidity issues but possibly still significant incremental savings