The business of climate change

NEW DELHI, September 12, 2013

International treaties, environment, science and business interests converge on the use and
replacement of refrigerant gases.
The issue of refrigerant gases is covered by two international agreements
Montreal Protocol (MP) and
U.N. Framework Contention on Climate Change (UNFCCC).

The MP is meant to reduce or do away with gases that cause a hole in the ozone layer that
envelopes the Earth mostly refrigerant gases and solvents.
The UNFCCC is meant to bring down emissions of greenhouse gases that warm up the planet.
Under the MP, rich countries began migrating from the earlier ozone-depleting refrigerant to
costly HFCs (hydrofluorocarbons).
HFCs do not cause any harm to the ozone layer but have very high potential to raise global
temperatures.
Unwilling to pay the price for the same technology transition in poorer countries, the MP
agreements ensured India and other emerging economies transit instead to HCFCs
(hydrochlorofluorocarbons) a family of gases that has lesser impact on the ozone layer but
are dangerous for the climate too. There were large financial gains for the industrialised
countries then too as HCFCs were also patented products.
As of now, between 2013 and 2030, developing countries are slated to make a second
transition under the MP, phasing out from HCFCs to HFCs.
But the U.S. now wishes that India leapfrog to the most advanced, least impacting, costly and
patented technologies bypassing the HFC phase.

One of the alternatives being proposed is produced jointly by DuPont and Honeywell, two
U.S.-based multinationals, and the other by the Japanese company Daiichi Sankyo Company
Limited.
India holds a large business potential. It is one of the fastest growing markets in the world for
refrigeration business.
But developing countries have long argued that HFCs being greenhouse gases and not
ozone-depleting substances should be covered under the basket of gases that UNFCCC
seeks to reduce.
Under the UNFCCC, in principle at least, the developed world is required to fund the entire
additional costs of developing countries making a technological transition for reduction of
greenhouse gases. But these costs they are high because proprietary technologies are
involved are not covered comprehensively under the MP.
The MP does have a mechanism to defray( provide money to pay ) the costs for the transition
but India has contended that an option for a prolonged period of transition and a cost-sharing
formula in the MP will not cover the investments India would have to make.
Besides a direct business proposition, there is another strategic advantage that the U.S. and
other developed countries gain on the climate change front.
The refrigerant gases to be phased out are short-lived in the atmosphere and contribute very
little at the moment as compared to carbon dioxide to the accumulated problem. But the
emissions of these gases are growing at a fast pace and these gases do have much higher
climate impact per unit than carbon dioxide.
By pushing for an early phase out of the short-lived HFCs instead of focusing on reducing
carbon dioxide emissions, the U.S. also gets a chance, India contends, to pass the buck for
action to emerging economies while claiming it is a global leader on the issue. It also is able
to buy time for the more troublesome and difficult reduction of its carbon dioxide emissions.
Recently the U.S. and China have signed an agreement to phase down the HFCs using the
financial mechanisms of the MP but accounting for them under the U.N. climate convention.
The U.S. has demanded that India agree to starting multilateral discussions under the protocol
and to move along the same route before Manmohan Singh lands in the U.S. So far Indian
officials have noted that the Chinese refrigerant business is at a different technological and
operational level and just because China has signed a deal does not mean India should too.
The Indian negotiators have also told the U.S. envoy that there is no advantage in working on
a bilateral basis on the subject if the only objective of the U.S. government is to push for
bringing the issue under the Montreal Protocol.
The final word on this controversy is yet to be heard with the negotiations for Manmohan
Singhs U.S. visit still continuing.