Australia’s emissions scheme to promote natural refrigerants

Australia’s emissions scheme to promote natural refrigerants

Under the Carbon Polution Reduction Scheme unveiled this week, the Australian government will impose strong price mechanisms to Australia’s emissions scheme to promote natural refrigerantsdrive the phase-out of HFCs and spur the transition to natural refrigerants such as hydrocarbons. [Updated with more details regarding the phase out of HFCs / HCFCs and incentives for natural refrigerants]

In its White Paper “Carbon Pollution Reduction Scheme: Australia’s Low Pollution Future”, the Australian government on Monday unveiled details concerning its future greenhouse gas emissions reduction scheme. Environmental groups have criticised the scheme for the lack of ambition inherent in the overall emissions reduction target of just 5-15 per cent below 2000 levels by 2020. According to the White Paper this “target range represents a comparable effort to others which have announced targets, such as the European Union”. The Australian target would translate into a target to reduce emissions by 4-14 per cent below 1990 levels, while the European Union target is set between 20-30 per cent below 1990 levels, with the lower end of the range more likely to apply.

Refrigerants covered

The scheme will cover synthetic greenhouse gases from its commencement. Measures under the Australian Carbon Pollution Reduction Scheme (CPRS), in relation to synthetic greenhouse gases include:

  • Making HFCs more expensive: The CPRS will apply pressure to phase out the use of high- GWP HFCs by making them subject to a strong price mechanism. This will be done by applying Scheme obligations to large importers, as well as raising existing import levies to achieve an equivalent carbon price on all synthetic greenhouse gases sold in Australia.
  • Early phase out of R22: One of the most immediate and significant effects on the RAC industry is that in new equipment use of the ozone depleting and powerful greenhouse gas HCFC R22 will now be phased out in 2010, five years sooner than planned.
  • Thresholds/accountability: Scheme obligations will be applied to entities that import or manufacture (there are currently none) 25,000 tonnes of CO2-equivalent a year or more.
  • Recovery and destruction incentives: Permits will be issued to entities that arrange for the destruction of used synthetic greenhouse gases in accordance with Scheme verification requirements, providing incentives to recover and destroy refrigerants at end of life and servicing of equipment.

    Drive for Natural Refrigerants

    Although the CPRS has received much criticism, it is expected to act as a strong financial driver for the use of alternatives to replace current high GWP HFCs. According to the not-for-profit organisation Green Cooling Council (GCC) the scheme will put in place powerful incentives to drive the use of climate friendly solutions in the refrigeration and air conditioning industry, including natural hydrocarbon refrigerants. The White Paper acknowledged the persuasive force of the GCC submission and substantially delivered on the recommendations. Arguments put forward by fluorocarbon proponents that HFCs should not be covered by the scheme were rejected.

    In summary, the strong price mechanism applying to HFCS and the early ban of R22 are expected to create substantial market demand for more acceptable solutions, namely natural refrigerants.

    Trading system

    Although modest in ambition in terms of the overall emissions reduction target, the Australian Carbon Pollution Reduction Scheme (CPRS) is unique in that it will be broader in scope than the existing cap and trade scheme in Europe and will cover the emissions of about 75 percent of the country’s greenhouse gases. More specifically, the Scheme will cover all six greenhouse gases that are covered under the Kyoto Protocol, taking into account the differences in their global warming potential (GWP) and therefore encouraging a broad range of cost-effective abatement activities. The Scheme will accordingly have broad sectoral coverage and will cover emission from stationary energy, transport, fugitive, industrial processes, waste and forestry sectors. It is estimated that the scheme will involve mandatory obligations for around 1000 entities.

    Background and next steps

    The White Paper confirms, elaborates on, and modifies the proposals contained in a Green Paper issued by the Australian government in July 2008, after having taken into account extensive feedback received since then.

    The White Paper is the foundation on which an ongoing response to climate change will continue to develop. Drafting for legislation to enact the Scheme is under way, and an exposure draft is expected to be released for public comment in late February 2009. Following public comment, the Australian government intends to introduce the relevant bills into the Australian Parliament in the winter session of 2009. Upon successful passage of the legislation, it is expected that the Scheme will begin on 1 July 2010.

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