India’s Air Conditioning Dilemma

The first phase of  international negotiations in Vienna to limit the super-warming chemicals called hydrofluorocarbons (HFCs) under the Montreal Protocol ended last week with agreement on key “challenges and solutions.” The Montreal Protocol’s Multilateral Fund (MLF) will continue to be used for phasing out HFCs and “sufficient additional financial resources” will be provided to developing countries to do this.

The minister-level negotiations this week must now hammer out an agreement on key issues such as fixing ambitious schedules for freezing and phasing down HFC production and use in both developed and developing countries and financial assistance to help developing countries achieve their phase-down commitments. If they can get close enough, they can ink the final HFC amendment to the Montreal Protocol when they meet in Kigali, Rwanda, in October this year.

The stakes are high. Used as a refrigerant, HFCs are the fastest growing greenhouse gases in much of the world, increasing at a rate of 10–15 percent per year. A  treaty amendment this year could prevent, between now and 2050, HFC emissions with a warming power equal to nearly three times the world’s current annual output of carbon dioxide. This would be the biggest climate protection achievement of 2016 and help power the Paris Climate Agreement.

During his visit last month, Indian Prime Minister Modi and U.S. President Obama pledged to work for the HFC amendment this year with “an ambitious phase down schedule” for all countries and “increased financial support” to  help developing countries with implementation.

Key issues highlighted by India during current negotiations are affordability, access to intellectual property, access to full conversion costs by the Multilateral Fund, and energy efficiency. India also proposes a long grace period of 15 years under which developing country’s obligations to the first step of phase down only begin in 2031.

Heirs to Chloro Floro Hydrocarbons (CFCs), which were phased out under the First Montreal protocol in 1987 on concerns about depleting the Ozon layer.  Recent studies by the Institute for Governance and Sustainable Development show they remain in the atmosphere for over a decade but cause 1,300 times as much warming as carbon dioxide does over a span of 100 years.

India has reasons to be particularly concerned. As a leader on Montreal Protocol, it has successfully phased out chlorofluorocarbons (CFCs) ahead of schedule and will achieve 100 percent reduction in production and consumption of ozone-depleting substances (ODS) by 2030.

Yet, it is faced with an air-conditioning boom in coming decade. The market of air conditioners in India is likely to witness a quantum jump from current 3.7 million with a penetration rate of three percent to 10 million units to a penetration rate of 11 percent by 2020. Unless there is a corresponding technological change, this will be accompanied by alarming levels of precipitous HFC emissions.

The rub is that US-led developed countries want India and other developing countries to leapfrog straight to cleaner technologies, while they themselves slowly phase them down and also make the transition.

If it does so, as one of the fastest growing global markets for air conditioning, India will have to bear a considerable cost for its domestic industry and for the consumers.  With the safety of some of the available alternatives yet unproven, it has also reasons to be wary of being used as testing ground for new products. Addressing cost issues are, therefore, imperative for India. 

Access to Intellectual Property Rights (IPR) is another valid concern. A joint study by the Centre for Science and Environment (CSE) and Council of Scientific and Industrial Research CSIR) shows that US companies have filed hundreds of product and application patents in India since discussions on phasing out HFCs started. Indian manufacturers will now have to pay them a high license fee to shift to alternative technologies.

The study titled “Intellectual Property Rights (IPR) impediments to an HFC phase down” revealed that it will cost the multilateral fund more than US $250 million to compensate for a technology transfer in Mobile Air Conditioning (MAC) alone by 2025. Currently, MAC accounts for only a fraction of the air conditioning industry. This would mean that there will be little money left for other sectors like stationary air conditioning, which have a larger contribution to the global HFC emissions.

There was a broad agreement during earlier rounds of talks that amendment to the Montreal Protocol will be passed only after issues of safety, intellectual property rights, and economics of the alternatives were fully addressed and resolved. But this did not figure in their June join statement when Modi and Obama pledged their commitment to speedy phasing out of HFCs.

India must now insist that the US and other developed countries resolve developing countries’ concerns about access to patented technologies and the availability of ample financing of agreed incremental costs. It can’t afford to sign on dotted lines with its hand tied.

A favourable agreement to phase down HFCs, on the other hand, will open a new window of opportunities for India. It will be a win-win for consumers, companies, and the environment. It will also support energy-efficient air conditioners and ensure that our scarce energy resources are used where they are needed most.