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Prerequisites
for preparation of terminal phase-out projects
The prerequisites will be determined from
consideration of the circumstances of Article 5 countries in relation to
achievement of Montreal Protocol control measures, the policies and practices
for effective use of Fund resources and the necessary requirements to ensure
that a proposal is soundly based, implementable and sustainable. These issues
have been well summarized in the principles contained in recent decisions
concerning this sector and could be expressed in the form of prerequisites for
project preparation as follows, with the reasons indicated immediately below:
(a) the
country has received enough assistance from the Fund to convert all appliance
manufacturers, other than SMEs;
(i) or there may not be priority for funding,
since simpler and potentially more cost-effective interventions are available
to meet reduction targets. This also suggests that a terminal phase-out
strategy in the refrigeration sector would normally be embarked upon after most
or all industrial conversion projects other than the informal sector had been
funded and/or implemented;
(ii) additionally, when consumption for
manufacturing approaches zero, it becomes more straightforward to obtain
reliable indications of the consumption used in the service sector, since the
activities of small or informal manufacturers are oriented primarily towards
installation and servicing;
(b) that
either no other possible alternatives would allow the country to meet its CFC
control obligations, or more stringent national targets, or the comparative
consumer price of CFCs, relative to substitute refrigerants, had been high for
at least 9 months and is predicted to continue to increase;
(i) where significant CFC-based manufacturing
activity remains, there may not be priority for funding a terminal phase-out
strategy since consumption can be reduced by continuing to implement industrial
conversion projects;
(ii) by the time CFC prices have become higher than
prices of substitutes, on current indications it is likely that conversion of
most CFC-based manufacturing capacity, other than very small enterprises and
the informal sector, will have been completed in most higher-consuming
countries;
(c) there
should be indications that the legislative and industrial support measures
necessary for successful implementation of terminal phase-out will be
operational and effective in the timeframe envisaged for project preparation
and implementation.
(i) extended
periods are sometimes needed to develop and operationalize institutional
support measures. The timing of terminal phase-out projects and their
preparation should be consistent with the availability of these measures;
(d) that the
modality for a preparation of a terminal phase-out project will be the
development of a long-term strategy for the refrigeration sector undertaken in
the context of a country programme update (RMP guidelines, decision 31/48 C);
(i) this means that the country should ensure
that it has accurate, current and sufficiently detailed knowledge about the
structure and consumption of its refrigeration sector.
Guidelines
for terminal phase-out projects
When the information obtained by a country and the
Implementing Agency, as discussed above indicates that the country is in a
position to request assistance from the Fund for implementation of a terminal
refrigeration phase-out project, proposals should be consistent with a set of
guidelines which might be along the lines of those indicated below:
(a) proposals
should be presented in the form of a long-term strategy for the refrigeration
sector under decision 31/48C (guidelines for RMPs for higher-consuming
countries), incorporating the principles outlined in the initial guidelines for
RMPs (decision 23/15);
(i) in other words, a terminal phase-out proposal
for the refrigeration sector is the same as a long term strategy for the
refrigeration sector in a larger-consuming country, in the same way that an RMP
for a low-volume-consuming country is a terminal phase-out project for that
country;
(b) proposals
should be consistent with all relevant rules and policies of the Multilateral
Fund as decided by the Executive Committee;
(c) Proposals
should contain inter alia the following elements:
(i) comprehensive data on the profile of all
remaining ODS consumption in the sector with breakdown into sub-sectors,
supported by results of analysis undertaken either before or during project
preparation, as a prerequisite to the proposal;
(ii) comprehensive data on the profile of the
remaining enterprises in the sector, with breakdown into sub-sectors, supported
by results of analysis undertaken either before or during project preparation,
indicating, inter alia, enterprises whose production capacity was installed
after 25 July 1995;
(iii) institutional support through government policy
directives or legislation and taxation or other fiscal measures; a timed action
plan and expected results in terms of ODS phase-out; coordination and
management by ozone offices and financial intermediaries; technology transfer
by local industry associations and/or component suppliers and systems houses;
(iv) the appropriate choice of technology,
innovative methodologies for achieving technology transfer; achievement of
economies of scale through geographical grouping or industrial rationalization;
financial arrangements which could provide flexibility in the allocation of
approved resources;
(v) the commitment of the Government to phase-out
ODS according to the proposed action plan;
(vi) a financing plan related to the major milestones
with provisions to release funds against the performance achieved;
(d) the
development of elements of the proposal and the determination of incremental
costs related to each activity or sub-sector should be guided by pertinent
policies of the Executive Committee, as expressed in decisions previously
taken, for instance:
(i) the elements related to the commercial
refrigeration end-user sector will be developed in accordance with policies
previously contained in decision 28/44;
(ii) the elements related to the new sub-sector for
the assembly, installation and servicing of refrigeration equipment will be
developed in accordance with decision 31/45;
(iii) the elements related to recovery and recycling
will be developed in accordance with decisions 22/22 (recycling projects in
CFC-producing countries) and 22/23 (general recovery and recycling projects).
(UNEP/OzL.Pro/ExCom/33/32, Decision 33/49, para. 75).
(Supporting document: UNEP/OzL.Pro/ExCom/33/25).
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