5.5.7 The Case of the Montreal Protocol
The possibilities for partnerships and financing for climate change mitigation
can be better understood through an examination of the historical experience
in phasing out ozone-depleting substances (ODSs) under the Montreal Protocol
on Substances that Deplete the Ozone Layer (see also Section
3.3.3 in Chapter 3). Evaluations of the economics
of the phaseout process that have been made since the Protocol was signed in
1987 have concluded that the speed of the phaseout has been faster, and the
cost lower, than had been anticipated when the Protocol was negotiated (Hammitt,
1997; Cook, 1996; Economic Options Committee, 1991, 1994, 1998). This happy
surprise is attributable largely to the unusual and unexpected channels for
technology transfer that emerged once the Protocol was in place.
The signing of the Montreal Protocol meant that significant cutbacks in ozone-depleting
substances had become a strategic business necessity. Industrial leaders' recognition
of this fact may in part have been simply an acknowledgement of the legal reality
of the Protocol, but there is ample reason to believe that their support of
the Protocol was based on an understanding of the science as well. Given the
existence of this sort of consensus, undertaking the kind of organisational
changes needed to eliminate ODSs followed. Participation in the ozone protection
effort became a basis for career advancement and a source of personal pride
for individuals within companies. Firms found that by redesigning processes
to reduce their need for ODSs, they could realise previously unforeseen productivity
gains, as when it was discovered that printed circuit boards could be manufactured
without having to clean off soldering residues with a CFC solvent (Iman and
Lichtenberg, 1993; Wexler, 1996a).
A variety of cooperative arrangements evolved under the umbrella of the Montreal
Protocol that facilitated technology transfer. Soon after the Protocol was signed,
a number of large corporations with major electronics interests formed ICOLP,
the Industry Cooperative for Ozone Layer Protection, to share information, discoveries,
and procedures for eliminating ODSs in their manufacturing processes. A similar
consortium was founded in Japan, the JICOP (Japan Industrial Conference for
Ozone Layer Protection). Company-to-company deals, multifaceted agreements involving
both companies and governments, and both formal and informal information exchanges
characterised the process. Examples include the trilateral agreement between
Thailand, Japan MITI, and the U.S. EPA (see Case Study 23)
and the cooperation between the Government of Mexico, Camara Nacional de la
Industria de la Transformacion, the Canadian telecommunication company Nortel
(Northern Telecom), the International Cooperative for Ozone Layer Protection,
and the U.S. EPA. (Economic Options Committee 1994; also see Case
Study 17)).
Governments played a supportive role in the formation of information-exchange
networks. In the United States, for example, a vital clearinghouse role was
filled by the U.S. Environmental Protection Agency's Stratospheric Ozone Protection
Division. The U.S. EPA, along with the industry-based Alliance for Responsible
Atmospheric Policy (formerly the Alliance for Responsible CFC Policy), Environment
Canada, and the United Nations Environment Programme, co-sponsored an annual
meeting in which industry practitioners presented papers detailing the progress
they had made in eliminating ODSs in their own operations. The culture of this
well-attended meeting was akin to a scientific symposium or a scholarly conference,
with an emphasis on free exchange of ideas. Part of the conference space was
devoted to a trade fair, in which the most recent advances in technology to
replace ODSs were on display. By 1998 the conference had evolved into the "Earth
Technologies Forum" covering climate protection technologies as well as
ODS elimination.
The Multilateral Fund, set up under the Montreal Protocol to assist developing
countries in defraying the "incremental costs" of compliance with
the Montreal Protocol, also played an important role. The Fund has financed
projects ranging from the development of individual country ODS-elimination
programmes to the building of large-scale industrial facilities that use alternate
technologies. In some respects, the Fund may be seen as a precursor and proving
ground for the functioning and organisation of the Global Environmental Facility
(see Box 5.2 on the GEF). It has been the objective
of this Multilateral Fund to provide development assistance that is "additional"
to other aid funds. Through establishment of the Multilateral Fund, the Parties
to the Montreal Protocol have addressed the equity concerns that for a time
retarded full participation in the ozone protection process by all the key countries
(neither China nor India signed the Montreal Protocol until the Multilateral
Fund was established at the London meeting of the Parties in 1990).
Government policies were able to exert a positive influence on technology development
in other ways. A major stumbling block to the elimination of ODSs in electronics
manufacture was removed when the U.S. Department of Defense changed its requirement
that CFC-113 be used to clean soldered electronic assemblies to a performance
standard (Wexler, 1996b). Governments have helped to develop standards for recycling
CFCs, and have supported the establishment of Halon "banks" to get
full use from the stock of ODSs that have already been produced (Economic Options
Committee, 1994). The United States imposed both an excise tax on 'new' ODSs
and a 'floor tax' on inventories beginning in 1990. The effect of such taxes
is to make new chemicals and technologies more attractive, and to encourage
reclamation and recycling (Economic Options Committee, 1994). The Ninth Meeting
of the Parties in Montreal, 1997, decided to require Parties to the Protocol
to establish licensing systems to control the import and export of new, used,
recycled and reclaimed substances, in order to reduce and eventually eliminate
illegal trade in controlled ODSs (Economic Options Committee, 1998).
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