tudy of impacts of gef activities on phase-out of ozone depleting substances

STUDY OF IMPACTS OF GEFACTIVITIES ON PHASE-OUT OF OZONE

DEPLETING SUBSTANCES

GEF EVALUATION REPORT

By:Dr. Sebastian Oberthür

Contributions by:Annette Kalnieva, Vladimir Demkin, Jan Peter Schemmel,and Dennis Tänzler

The views expressed in this report are those of its author and do not necessarily representthe views of the GEF.

TABLE OF CONTENTS

1. Background ................................................................................................... 12. Purpose of the Study ..................................................................................... 33. ODS Phase-out in CEITs: Achievements ...................................................... 44. Policies and Measures for ODS Phase-out .................................................... 65. The Contribution of the GEF .......................................................................... 96. Problems and Challenges ............................................................................... 127. Lessons Learned for Future GEF Activities ................................................... 15

ANNEXES - Country Review Summaries ............................................................... 19

Azerbaijan ..................................................................................................... 21Belarus ......................................................................................................... 23Bulgaria ........................................................................................................ 25Czech Republic ............................................................................................. 27Estonia .......................................................................................................... 29Hungary ........................................................................................................ 31Latvia ........................................................................................................... 33Lithuania ....................................................................................................... 35Poland ........................................................................................................... 37Russian Federation ........................................................................................ 39Slovakia ........................................................................................................ 43Slovenia ........................................................................................................ 45Turkmenistan................................................................................................. 47Ukraine ......................................................................................................... 49Uzbekistan .................................................................................................... 51

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iv

LIST OF FIGURES AND TABLES

Figure A: Consumption of Annex A and B substances in CEITs from1986/1989 to 1997 .................................................................................................... 4

Figure B: Consumption of Annex C and E Substances in CEITs from 1989/91to 1997 ..................................................................................................................... 15

Table 1: Information on CEITs Receiving GEF Support .......................................................... 5Table 2: Policies and Measures in CEITs ............................................................................... 7Table 3: Summary and Status of GEF Projects in CEITs ........................................................ 10

Figure 1: Consumption of Annex A and B Substances and the GEFProject in Azerbaijan from 1996-2002 ....................................................................... 21

Figure 2: Consumption of Annex A and B Substances and the GEFProject in Belarus from 1994 to 2000 ........................................................................ 23

Figure 3: Consumption of Annex A and B Substances and the GEFProject in Bulgaria from 1992 to 1999 ....................................................................... 25

Figure 4: Consumption of Annex A and B Substances and the GEFProject in Czech Republic from 1991 to 1998 ........................................................... 27

Figure 5: Consumption of Annex A and B Substances and the GEFProject in Estonia from 1996 to 2002 ........................................................................ 29

Figure 6: Consumption of Annex A and B Substances and the GEFProject in Hungary from 1993 to 1998 ...................................................................... 31

Figure 7: Consumption of Annex A and B Substances and the GEFProject in Latvia from 1995 to 2002 .......................................................................... 33

Figure 8: Consumption of Annex A and B Substances and the GEFProject in Lithuania from 1995 to 2002 .................................................................... 35

Figure 9: Consumption of Annex A and B Substances and the GEFProject in Poland from 1994 to 2000 ......................................................................... 37

Figure 10.1: Consumption of Annex A and B Substances and the GEFProject in the Russian Federation from 1992 to 2001 ................................................ 39

Figure 10.2: Production of Annex A and B Substances in the Russian Federationfrom 1992 to 2001 .................................................................................................... 39

Figure 11: Consumption of Annex A and B Substances and the GEFProject in Slovakia from 1991 to 1999 ....................................................................... 43

Figure 12: Consumption of Annex A and B Substances and the GEFProject in Slovenia from 1992 to 1998 ....................................................................... 45

Figure 13: Consumption of Annex A and B Substances and the GEFProject in Turkmenistan from 1996 to 2003 ............................................................... 47

Figure 14: Consumption of Annex A and B Substances and the GEFProject in Ukraine from 1994 to 2002 ....................................................................... 49

Figure 15: Consumption of Annex A and B Substances and the GEFProject in Uzbekistan from 1996 to 2002 ................................................................... 51

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GLOSSARY OF TERMS AND ABBREVIATIONS

Annex A and B Substances Ozone depleting substances included in Annexes A and Bof the Montreal Protocol

A I/A II (substances) Ozone-depleting substances included in groups I (CFCs)or II (halons) of Annex A of the Montreal Protocol

Appraised Phase-Out ODP tons to be phased out by GEF subprojects and the GEFproject in total as envisaged in projects documents as thebasis of planning

B I/B II/B III (substances) Ozone-depleting substances included in groups I (other fullyhalogenated CFCs), II (carbon tetrachloride) or III (methylchloroform) of Annex B of the Montreal Protocol

CEIT Countries with economies in transitionCEO Chief Executive Officer (of the GEF)CFCs ChlorofluorocarbonsConsumption Consumption as defined by the Montreal Protocol equals

production minus exports plus importsCP Country Program (for the phase-out of ODS)CTC Carbon tetrachlorideGEF Global Environment FacilityHCFCs HydrochlorofluorocarbonsHFCs HydrofluorocarbonsMOP Meeting of the Parties to the Montreal ProtocolODP tons Metric tons weighted according to the ODP of the

respective ODSODS Ozone depleting substancesOzone Secretariat Secretariat for the Vienna Convention for the Protection of

the Ozone Layer and its Montreal Protocol on Substancesthat Deplete the Ozone Layer

POPs Persistent organic pollutantsR&R Recovery and recyclingUNDP United Nations Development ProgrammeUNEP United Nations Environment Programme

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SUMMARY

The thematic review in the ozone focal area consists of an impact study commissioned bythe Monitoring and Evaluation (M&E) team to Ecologic, Centre for International and EuropeanEnvironmental Research, through UNEP's Paris Office. The study provides a detailed account ofthe effects of GEF support and other progress made in 14 out of the 19 countries supported in EastEurope and Central Asia to phase-out ozone depleting substances (ODS), as mandated by the MontrealProtocol.

The study is based on data reported by the countries to the Ozone Secretariat in Nairobi, andby data from the implementing agencies and verified by the countries themselves. The study con-cludes that GEF support through UNDP, UNEP, and the World Bank has played a crucial role in thephase-out process by providing much needed financial assistance, assistance in establishing legalframeworks and technical expertise, and supporting learning and dissemination of project lessonswithin each country and in a regional context.

This study demonstrates clearly that substantive progress on global environmental issues isindeed attainable. In this case, it has been facilitated by a binding protocol, national commitments,international financial resources, concerted actions among agencies, and systems for measurementsand verification. It also demonstrates that GEF, as a financial mechanism, is very well placed tocoordinate efforts at sectoral, national, and regional levels in both the ozone and the climate changefocal areas.

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Countries with economies in transition (CEITs)have faced difficulties in meeting theindustrialized countries' phase-out schedulesagreed under the Montreal Protocol. As a result,a number of CEITs have been in non-compliance with the control measures underthe Protocol. This has been a continuousconcern of the Implementation Committeeunder the Non-Compliance Procedure for theMontreal Protocol as well as the Meeting ofthe Parties to the Montreal Protocol (MOP).

To address the challenge of phasing out ozonedepleting substances (ODS), most CEITs havenot been able to draw on the Multilateral Fundfor the Implementation of the MontrealProtocol. Only developing country Partiesoperating under Article 5 of the Protocol areeligible for assistance from this source. MostCEITs have not been classified as operatingunder Article 5 of the Protocol, since they aretraditional industrialized countries in centraland eastern Europe or have succeeded theformer Soviet Union.

Beneficiaries of GEF support

Since 1992, the Global Environment Facility(GEF) has thus offered assistance to CEITs forphasing out ODS, as mandated by the MontrealProtocol. To date, 19 CEITs have received as-sistance from the GEF for the preparation andimplementation of their ODS phase-out pro-grams.1 Two of these countries (Estonia andKazakhstan) are still finalizing their nationalcountry programs. They, along with Tajikistan,whose country program has been submitted tothe GEF Council for approval, are expected tostart implementation in 1999/2000. Two otherCEITs (Georgia and Moldova) received sup-port for the preparation of projects, but as the

projects were being considered, the countrieswere reclassified as Article 5 countries underthe Montreal Protocol. Thus, when their phase-out activities were subsequently implemented,they were funded by the Multilateral Fund forthe Implementation of the Montreal Protocol.Slovenia is the only CEIT country that has beenso reclassified after approval of GEF supportfor the implementation of its phase-out activi-ties and has thus received GEF support for itsphase-out subprojects.

Cooperation with theImplementation Committee

In assisting CEITs, the GEF has cooperatedclosely with the Implementation Committee ofthe Montreal Protocol by making support de-pendent on approval by the Committee. As aconsequence, ratification of the LondonAmendment to the Protocol demanding phase-out of all major ODS2 has become a precondi-tion for receiving GEF assistance for theimplementation of phase-out programs in theGEF Operational Strategy adopted in October1995. Also, the Implementation Committee hasasked non-compliant CEITs to commit to clearphase-out schedules for bringing them in com-pliance with the Protocol and to provide bench-marks for measuring progress in the phase-outprocess. On that basis, the tenth Meeting of theParties to the Montreal Protocol (MOP 10) has,upon recommendation by the ImplementationCommittee, determined a number of relatedbenchmarks in 1998.

The GEF project cycle

Receiving GEF assistance has involved goingthrough a certain project cycle, including thefollowing steps:

• Preparation of a national country pro-gram for the phase-out of ODS;

1. BACKGROUND

1 Azerbaijan, Belarus, Bulgaria, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Latvia, Lithuania, Moldova,Poland, Russia, Slovakia, Slovenia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan

2 Annex A and B substances are considered major ODS.

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Study of Impacts of GEF Activities on Phase-Out of Ozone Depleting Substances

• Preparation of the "GEF project;"

• Project appraisal; and

• Project implementation.

The country program

A country program for the phase-out of ODS(CP), inter alia, includes data on productionand consumption of ODS in the base year ofthe CP and identifies various subprojectsproposed for implementation. Frequently,country programs have been prepared withexternal assistance, including from the GEF.National country programs have usually onlybeen related to consumption of ODS becauseonly four CEITs were producers. Of the fourODS producers among CEITs (Czech Republic,Poland, Russia and Ukraine), support forproduction phase-out was only envisaged in theCzech Republic in the form of a study. InRussia, some of the resources have eventuallybeen reallocated to production phase-out.

The GEF project

The so-called "GEF project" usually definesin more detail the activities ("subprojects") tobe carried out. This builds the basis of approvalby the GEF Council that includes the GEFProject in its work program. Project appraisalwith exact definitions and subproject planningare the next steps in this process, which is com-plete once endorsement of the GEF Chief Ex-ecutive Officer (CEO) is received. Afterwards,implementation can start once the respectivegrant agreements have been signed between theCEIT and the Implementing Agency.

Scope of GEF support

GEF support has not only aimed to implementsector-specific ODS phase-out projects, it hasalso been instrumental in securing the recipientcountry's commitment to phase out all ODS usein accordance with the schedules elaborated incooperation with the ImplementationCommittee of the Montreal Protocol. The GEF

impact has thus gone beyond the immediateappraised phase-out of GEF-funded investmentprojects. The GEF has generally aimed toenable recipient countries to come intocompliance with the Montreal Protocol and hasgranted financial and technological supportonly for the most difficult parts of the phase-out process to catalyze action in the remainingareas as well.

Implementing Agencies

GEF has provided resources with which UNDP,UNEP and the World Bank as ImplementingAgencies prepare GEF projects (based on thenational country programs) and implement theapproved subprojects contained therein. UNDPand UNEP jointly provide assistance with GEFfunding to eight CEITs (of which five alreadyimplement GEF projects). UNDP is responsiblefor investment subprojects, and UNEP has thelead on country program preparation,institutional strengthening and capacitybuilding, and information and trainingactivities. Since UNDP and UNEP act jointly,the respective GEF projects are also sometimesreferred to as "GEF umbrella projects." TheWorld Bank has acted as the sole ImplementingAgency for nine CEITs. After GEF approval/CEO endorsement, the GEF projects go throughthe respective approval procedure of eachImplementing Agency. The approach of theImplementing Agencies during implementationalso varies: While UNDP and UNEP areassisted by the UNDP country offices, theWorld Bank acts through financialintermediaries, i.e., the national banks.

Project criteria

Generally, procedures and project criteriaapplied in the GEF context have mirrored thoseof the Multilateral Fund. On the basis of thecost-effectiveness thresholds applied under theMultilateral Fund, GEF has thus provided the"incremental costs" of projects to phase outODS contained in Annexes A and B of theMontreal Protocol (CFCs: A I; halons: A II;other fully halogenated CFCs: B I; carbon

3

cooperation with the countries concerned, futurebenchmarks and milestones on the way to totalphase-out of Annex A and B substances were tobe defined in the relevant cases.

Consequently, Ecologic engaged in a compre-hensive data collection effort based on availablenational country programs, GEF project docu-ments, production and consumption data as re-ported under Article 7 of the Montreal Protocolto the Ozone Secretariat in Nairobi, and inputand information provided by the ImplementingAgencies. Drafts of the country analyses weresent to the national ozone units of the CEITs forcomments and additions in the spring of 1999.Upon receipt of their comments, final draftswere prepared and submitted once more to na-tional ozone units in July 1999 for their endorse-ment. The report takes into account all commentsreceived by October 10, 1999. The data can thusbe considered endorsed by national ozone units.

The study is not based on empirical field studiesbut summarizes the data officially available andprovided by the ozone offices of recipientgovernments. It reviews the state ofimplementation of the Montreal Protocol in eachCEIT that has received GEF support for theimplementation of its ODS phase-out program.A detailed analysis of progress achieved andproblems encountered in each recipient countryin phasing out ODS since the base year of therespective CP is presented in the full report. Thisanalysis addresses the overall consumption ofAnnex A and B substances, the groups ofcontrolled substances as well as the various usersectors. Supportive policy and legal measuresin each of the CEITs are also presented. A specialfocus is put on the GEF-funded elementsassociated with investment subprojects as wellas non-investment activities (e.g., capacitybuilding, institutional strengthening andtraining).

Content of the Report

This report presents the main conclusions of thestudy and summarizes its results. Country reviewsummaries are provided in the Annex. They

tetrachloride: B II; methyl chloroform; B III).Since 1997, funding of methyl bromide(Annex E I) projects has also become possible.

The GEF Operational Strategy of 1995,however, also reflects a number of differencesbetween GEF and the Multilateral Fund.Among the most important is that GEFprovides funding to subprojects converting toHFC technology only if more climate-friendlyalternatives (such as hydrocarbons) are shownto be technically unfeasible or economicallyunacceptable. Furthermore, retroactivefinancing is only possible within strict limits,and any operational costs are ineligible forGEF financing.

2. PURPOSE OF THE

STUDY

Objective and methodology

In response to concerns about the continuingnon-compliance of a number of CEITs withthe Montreal Protocol, the GEF Secretariat,supported by UNEP's Division of Technology,Industry and Economics, commissionedEcologic in early 1999 to conduct a study onthe current state of implementation of theMontreal Protocol in those CEITs that areimplementing ODS phase-out programs withfinancial support by the GEF. The objectiveof the study was to collect available data onthe production and consumption of ODS ineach CEIT recipient of GEF support, includingsectoral data and data on ODS use by thevarious enterprises that have implementedsubprojects within the framework of GEFprojects. By comparing the actual trends inODS production and consumption with theoriginal implementation and phase-outschedules as contained in the different nationalcountry programs and GEF projectdocuments, the progress and any remainingproblems were to be highlighted. Based onpast development and updated information onthe planning of the respective CEITs, and in

Purpose of the Study

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contain information on the status of ratification,the country program, the GEF assistance, thepolicies and measures taken, and the status ofODS phase-out and of the GEF project. Inaddition to the 14 countries that have receivedfinancial support for the implementation of theODS phase-out, information on Estonia isincluded because implementation should startsoon and the Implementation Committee of theMontreal Protocol has already dealt with thatcase. The summaries also contain an outlookfor the future. For those countries requiringseveral years before the completion of thephase-out of Annex A and B substances, thisinvolves presenting benchmarks for measuringprogress towards this phase-out. Thesebenchmarks have been developed incooperation with the countries concerned andincorporate the Decisions of the Meeting of theParties of the Montreal Protocol.

3. ODS PHASE-OUT

IN CEITS:ACHIEVEMENTS

Non-compliance of CEITs

Most of the CEITs receiving GEF support havefaced considerable difficulties in fulfilling theirobligations under the Montreal Protocol tophase out ODS contained in Annexes A and Bof the Protocol. Except for Hungary, Slovakiaand Slovenia (which was reclassified as anArticle 5 country after 19953), all other CEITsstudied have at times been in non-compliancewith the control measures of the MontrealProtocol. By 1997/1998, Bulgaria and Polandachieved compliance and the Czech Republic

Figure A: Consumption of Annex A and B Substances in CEITs from1986/1989 to 1997

Note: The time series was included only when data for at least half of the years was available. The figure is thus basedon incomplete data.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

1986 1989 1990 1991 1992 1993 1994 1995 1996 1997

years

OD

P to

ns

A I

A II

B I-III

3 Georgia and Moldova were also reclassified as operating under Article 5 after they received GEF support forcountry program preparation. They are not covered by this study, as the implementation of their country programswas supported, after reclassification, by the Multilateral Fund.

5

had nearly achieved compliance. Non-compliance has prevailed in the other eightCEITs that have implemented GEF Projects aswell as Estonia, which is likely to implementits phase-out program with GEF support in thenear future.

Progress in ODS phase-out

According to official data reports under Article7 of the Montreal Protocol, total consumptionof Annex A and B substances in the countriesreviewed decreased from about 190,000 ODPtons in the second half of the 1980s to less than15,000 ODP tons by 1997, a drop of more than

90% (see Figure A and Table 1). Productionhas been reduced accordingly. Of the fouroriginal ODS producers among CEITs, onlyRussia has sustained a considerable productioncapacity and that is set to be scrapped/convertedby mid-2000. Russia has continually accountedfor over two-thirds of ODS production andconsumption of CEITs receiving GEF support.

Different base years have been defined in therespective country programs. These range from1991 for the Czech Republic and Slovakia to1996 for Azerbaijan, Turkmenistan andUzbekistan. These country program base yearsgenerally indicate the start of planning for ODS

Table 1: Information on CEITs Receiving GEF Support

Country

GNP perCapita

(US $ in 1997)

Population(Mio. in 1997)

Status ofRatification*

Annex A and Bconsumption

1986/89(ODP tons)

Annex A and Bconsumption

in 1997(ODP tons)

Compliance(expected)

Azerbaijan 510 8 MP,LA,CA 3,759.7 348.7 (2001)

Belarus 2,150 10 MP,LA 2,811.8 403.2 (2000)

Bulgaria 1,140 8 MP,LA 3,290.0 1.6 üCzech Republic 5,200 10 MP,LA,CA 8,654.6 11.7 (ü)Estonia 3,300 1 MP,LA,CA 311.9 45.2 (2002)

Hungary 4,430 10 MP,LA,CA, MA 8,254.2 3.9 üKazakhstan 1,340 16 MP n.a. n.a. n.a.

Latvia 2,430 2 MP,LA,CA 6,183.0 107.2 (2000)

Lithuania 2,230 4 MP,LA,CA 5,595.2 120.2 (2001)

Poland 3,590 39 MP,LA,CA 9,880.5 312.5 üRussian Federation 2,740 147 MP,LA,CA 132,532.0 11,773.8 (2001)

Slovakia 3,700 5 MP,LA,CA 1,873.6 1.5 üSlovenia 9,680 2 MP,LA,CA 2,838.2 0.4 üTajikistan 330 6 MP,LA n.a. n.a. n.a.

Turkmenistan 630 5 MP,LA, n.a. 26.4 (2003)

Ukraine 1,040 50 MP,LA, 4,493.2 1,406.7(-2,178.6 CTC)

(2002)

Uzbekistan 1,010 24 MP,LA,CA 1,888.1 55.8 (2002)

Total 347 192,366.0 14,618.8

Source: World Bank, World Development Report 1998/99; official data reports to the Ozone Secretariat in Nairobi. The table includesEstonia, Kazakhstan and Tajikistan, which are preparing for implementation of GEF projects.

*MP: Montreal Protocol; LA: London Amendment; CA: Copenhagen Amendment; MA: Montreal Amendment.

ODS Phase-Out in CEITs: Achievements

6


phase-out with GEF support. On average, con-sumption of Annex A and B substances in GEFrecipient countries has declined by more than75% from such base year levels (from morethan 66,000 ODP tons to less than 15,000 ODPtons in 1997) (see Tables 1 and 3).

Conclusion

Short of compliance, significant overallprogress has nevertheless been attained towardsfull phase-out of Annex A and B substances.Considerable efforts will be needed, however,to complete and sustain the phase-out of CFCsand other Annex A and B substances. The cen-tral and eastern European countries by and largeappear to have completed the transition toozone-friendly technologies successfully. Themajor remaining consumers of Annex A and Bsubstances are the Newly Independent States(NIS) and the Baltic States.

Outlook

With the completion of the phase-out in Russiain 2000, the major source for supply of virginODS to other NIS will dry out (save to theextent that stockpiled material may beexported). This is bound to increase pressureon the countries consuming lower volumes toproceed with their phase-out programs. Smallercountries with limited economic capabilities(the central Asian countries in particular) mayface special difficulties. The transition toozone-friendly technologies in all remainingCEITs that still consume Annex A and Bsubstances and receive GEF support arecurrently expected to come into compliancewith the Montreal Protocol between 2000 and2003 (see Table 1).

Some CEITs (Estonia, Tajikistan andKazakhstan) are only in the initial stages ofpreparing and implementing their country pro-grams for ODS phase-out. Given the experi-ence with the time required to reach fulleffectiveness of related GEF projects, thesecountries will face difficulties achieving a

timely transition. In this respect, the increas-ing awareness of and interest in the MontrealProtocol over recent years constitutes a sign ofhope. A strenuous effort will nevertheless berequired to bring these and other CEITs intocompliance and avoid unnecessary economicdisturbances.

4. POLICIES AND

MEASURES FOR

ODS PHASE-OUT

CEITs have implemented various supportiveand innovative policies and measures (seeTable 2), which have usually been accompa-nied by institutional strengthening subprojectsand UNEP's regional activities implementedwith GEF assistance.

Import/export licensing systems

All recipient countries including Estonia havealready established import/export licensingsystems or are planning to do so in the nearfuture (Azerbaijan, Estonia, Turkmenistan andUzbekistan). Latvia and Turkmenistan havedesigned their licensing systems to cover onlyimports, which is not yet sufficient for fulfillingthe requirements of the Montreal Amendmentto the Montreal Protocol of 1997. Most othercountries, however, appear to fulfill theserequirements or plan to fulfill them in the nearfuture (although only Hungary had ratified thisAmendment as of October 19, 1999). Thedesign of licensing systems among countriesvaries somewhat. Four countries are known (toplan) to license not only ODS but also relatedproducts containing these substances (Belarus,Russia, Ukraine and Uzbekistan). Thesecountries are going beyond internationalrequirements mainly to control the entry intothe country of equipment requiring ODS forits functioning because ODS demand createdin this way could endanger the phase-outprocess.

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Import quotas

Nine of the 14 recipient countries (15 includingEstonia) have complemented their import/export licensing systems with import quotas orplan to do so to foster an orderly phase-outprocess and closely control remaining ODSconsumption. Again, these policies varybetween CEITs. While the Czech Republicapplies import quotas to ODS and productscontaining them, Poland and Azerbaijan haveonly CFC import quotas in place. Lithuaniaapplies quotas for imports of certain ODS-related products. Some CEITs that have not yetapplied import quotas may feel little reason to

do so because imports of major ODS are banned(Bulgaria and Slovenia) or because domesticproduction supplies domestic demand(Russia). However, even in these cases,establishing import quotas might help controlconsumption of remaining allowed ODS(HCFCs and methyl bromide) and ODS-basedproducts or import of ODS not produceddomestically (as in Russia).

Import bans

Consequently, a number of CEITs haveimplemented selective import bans as well asimport quotas (e.g., Czech Republic and

Table 2: Policies and Measures in CEITsEconomic

instrumentsImport / export

licensing systemImport quotas Import ban Use ban

Azerbaijan (4) (4) 4 for CFCs 4 on halons(4 on products)

Belarus 4 4ODS and products

4 (4 on Annex A and Bsubstances)

Bulgaria 4 4 on Annex A and Bsubstances and

products

CzechRepublic

4 4ODS and products

4 on CFCs andrelated products

4 on CFC and HCFCaerosols

Estonia (4)

Hungary 4 4 4 4 on ODS as aerosols

Latvia 4 4imports only

4 4 on halons

Lithuania 4 (4 for certainproducts)

(4on certainproducts)

4 on ODS in certainsectors (+ certain

ODS)

Poland 4 4 4 for CFCs 4 on certain products 4 on certain products

RussianFederation

(4) 4ODS and products

Slovakia 4 4 4 4 except for HCFCsand methyl bromide

4 except for HCFCsand methyl bromide

Slovenia 4 4 except for HCFCsand methyl bromide

Turkmenistan (4) (4imports only)

(4 on products)

Ukraine (4) 4ODS and products

Uzbekistan (4) (4ODS and products)

(4 for CFCs and Bsubstances)

(4on halons andcertain

CFCs/products)

Note: Measures listed in brackets are planned/in preparation; for details, see country sections. Estonia is not yet implementing aGEF project, but is included for information.

Policies and Measures for ODS Phase-Out

8


Slovakia; see Table 2). There is a wide varianceamong existing import bans and those expectedto be established in the recipient countries. Thescope of such bans appears to depend first ofall on the respective phase of the phase-outprocess in each country. Countries that havealready completed phase-out of Annex A andB substances have also banned the import ofthese substances. Others have only banned theimport of certain ODS (like halons in the caseof Azerbaijan and Latvia) depending onwhether and to what extent they have beensuccessful in eliminating demand for thesesubstances.

Use bans

In comparison with the other policy instrumentslisted in Table 2, use bans have been establishedrelatively rarely. Such use bans on certainsubstances and/or certain sectors have proveninstrumental in phasing out ODS and reducingsectoral demand (and thus demand for illegalimports) in a number of western Europeancountries in particular. However, only fiveCEITs reviewed here have used this instrument.(Belarus is planning to implement it in pursuingits total phase-out of Annex A and Bsubstances.) Furthermore, some of the use bansin effect are very limited in scope. For example,the Czech Republic and Hungary banned ODSuse in aerosols, and Poland banned the use ofcertain relevant products.

Economic instruments

Perhaps most notably, ten of the 14 recipientcountries have either already implementedsome kind of economic instruments or areplanning to do so. These economic instrumentstake different forms, ranging from import taxes,import duties or import fees on ODS to chargesfor ODS waste disposal. In the case of somecountries that plan to introduce economicinstruments, these have not been specified yet(Russia, Turkmenistan and Uzbekistan).

In a few cases, the economic burden placed onimporters and/or wholesalers by such economicinstruments has been found to impede flexibleimplementation of the ODS phase-out and earlycoming into compliance with the MontrealProtocol. For example, the import fee on CFCsin Belarus has discouraged importers/wholesalers from stockpiling. But stockpilingmight be a tool for achieving compliance withthe Montreal Protocol while meeting demand,especially for servicing existing equipment ina transitional period (see below).

In general, however, these types of economicinstruments have been effective not only incontrolling and discouraging the import and useof ODS, but in helping demonstrate thefunctioning of such instruments. They havethus paved the way for the application ofinnovative market-based instruments in otherareas of environmental policy. As evidence, anumber of CEITs have developed economicinstruments as part of their climate policies.Additionally, it has been found that theenvironmental benefit of such instruments canbe enhanced significantly if the proceeds arechannelled to provide support for further ODSphase-out efforts or for reaching other envi-ronmental objectives.

Conclusion

It is the mix of policies and measures that isdecisive for achieving ODS phase-out.Separately, they cannot be meaningfully rankedaccording to their effectiveness in achievingODS phase-out. CEITs are well-advanced withrespect to implementing controls on trade inODS. The degree to which they have made useof economic instruments is noteworthy and islikely to help establish economic instrumentsin other areas of environmental policy, mostnotably climate policy. In contrast, userestrictions related to certain substances andsectors (an instrument that reduces demand forODS and thus illegal ODS imports) are lessdeveloped still.

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5. THE CONTRIBUTION

OF THE GEFScope of GEF assistance

The GEF has approved projects for the ODSphase-out in 14 CEITs. Through its Implement-ing Agencies (UNDP, UNEP and the WorldBank), it has played a crucial role in the phase-out process in these countries not only byproviding much needed financial assistance,but by making available technical expertise,supporting learning and dissemination ofproject lessons within countries and regionally,and assisting in establishing suitable legalframeworks. An overview of the status of theGEF projects in the 14 CEITs receiving GEFsupport, including key data, is presented inTable 3.

Resources and subprojects

GEF has committed a total amount of more thanUS$138 million to the mentioned phase-outprojects. Thereby, an average of 66% has been(or will be) provided to the total costs of 121subprojects of about US$205 million. Russiahas the biggest number of subprojects (23),while Slovakia has implemented only two sub-projects. The majority of countries has imple-mented between six and 15 subprojects.

GEF support covers a wide range in that it mayprovide the full costs of some subprojects,while it has contributed a few percent of totalcost in other cases. On a country-wide basis,GEF is set to cover close to all costs of thephase-out of Annex A and B substances in low-volume consuming countries like Turkmenistanand Uzbekistan. In contrast, it has only con-tributed slightly more than 30% in the case ofPoland. GEF funding amounts to US$2-10million per country for the majority of recipi-ents (see Table 3). Given Russia's dominantposition in ODS production and consumption,the Russian GEF project amounts to US$60million. At the other end of the spectrum, the

GEF contribution to the Turkmenistan ODSphase-out is some US$360,000.

Impact of projects

The Russian GEF project also accounts formore than 60% of the total direct GEF impactin terms of ODP tons of Annex A and B sub-stances to be phased out by the subprojects(11,800 ODP tons). In total, the 14 GEF projectshave had an appraised direct ODS phase-outof 18,600 ODP tons (Table 3). On a countrybasis, roughly 20-60% of total ODS consump-tion in the CP base years have been phased outdirectly with the assistance of the various GEFprojects. Exact figures are difficult to obtainbecause the basis for assessing appraised phase-out may vary from subproject to subproject.For example, the base years of appraised phase-out in the three tranches of the Russian GEFproject cover the range of 1992-1998. The ap-praised phase-out of the GEF subprojects inRussia of 11,800 ODP tons may thus representan estimated 25-60% of total consumption.

Five countries have completed their GEFprojects (Czech Republic, Hungary andSlovenia) or are scheduled to complete themin 1999 (Bulgaria and Slovakia). In addition,Poland's GEF project is scheduled for comple-tion in early 2000. In all these countries, full ornearly full (Czech Republic) compliance withthe Montreal Protocol has been achieved; thusthe main objective of GEF involvement hasbeen realized. Similarly, the eight non-compli-ant CEITs where project implementation willnot be completed until the next century (by2003) as well as those countries where imple-mentation has not yet started (Estonia,Kazakhstan and Tajikistan) may be expectedto come into compliance eventually.

Impact of subprojects

The completed subprojects have generallyresulted in the total phase-out of Annex A andB substances. However, in most cases, ODSconsumption had been reduced significantlyprior to the start of implementation. Several

The Contribution of the GEF

10

Table 3: Summary and Status of GEF Projects in CEITs

Country

Base yearconsumption*

(ODP tons) [baseyear]

AppraisedODS

phase-out(ODP tons)

Total cost(US$ )

Contribution byGEF (% of total)

No. ofsubprojects

Start ofimplementation

Time lag betweenfinalization of CP

and start ofimplementation***

Completion(projected) of

implementation

ImplementingAgency

Azerbaijan 960.6 (1996) 307.4 8.98 6.75 (75.2%) 6 2/1999 1 year 2002 UNDP/UNEP

Belarus 1,005.8 (1994) 619.7 15.72 6.89 (43.8%) 8 8/1997 2 years 2000 World Bank

Bulgaria 1,360.0 (1992) 334.4 13.27 10.55 (79.6%) 15 5/1996 2 years 1999 World Bank

Czech Republic 2,466.1 (1991) 390.0 4.12 2.41 (58.5%) 5 12/1994 2 ½ years 3/1998 (compl.) World Bank

Hungary 1,854.1 (1993) 1,156.4 8.21 6.50 (79.2%) 14 end 1995 1 year end 1998(compl.)

World Bank

Latvia 711.3 (1995) 223.6 1.86 1.66 (88.9%) 6 early 1999 2 years 2002 UNDP/UNEP

Lithuania 371.5 (1995) 387.0 8.04 4.46 (55.5%) 7 5/1998 1 year 2002 UNDP/UNEP

Poland 4,147.8 (1994) 1,054.0 20.17 6.21 (30.8%) 9 early 1997 2 year 2000 World Bank

RussianFederation

48,662.6 (1992) 11,842.0 71.97** 59.96 (83.3%) 23 mid 1996 ½ year 2003 World Bank

Slovakia 832.2 (1991) 283.0 5.95 3.50 (58.8%) 2 1996 3 years end 1999 World Bank

Slovenia 1,205.9 (1992) 338.2 8.84 5.88 (66.6%) 7 end 1995 1 ½ year 6/1998 (compl.) World Bank

Turkmenistan 29.6 (1996) 14.1 .38 .36 (94%) 3 2/1999 ½ year 2001 UNDP/UNEP

Ukraine 2,460.5 (1994) 1,299.8 32.74 23.27 (71.1%) 12 3/1999 3 ½ year (2 ½ fromgov’t.. approval)

2001 World Bank

Uzbekistan 272.2 (1996) 142.0 3.36 3.20 (95%) 4 early 1999 ½ year 2001 UNDP/UNEP

Total 66,340.2 18,391.6 203.61 138.41 (68.0%) 121 ∅ 1 ½ year

Source of ODS consumption data: Official data reports to the Ozone Secretariat in Nairobi.

* Base year as given in the respective country program

** Total cost incomplete

*** Finalization of CP denotes completion of the CP document (prior to government approval)

Study of Im

pacts of GE

F Activities on P

hase-Out of O

zone Depleting S

ubstances

11

subprojects had even phased out completely theuse of Annex A and B substances in advanceof implementation of the GEF project. This isdue to a number of factors. For example, anumber of subprojects have been fundedretroactively, i.e., ozone-friendly technologywas introduced in anticipation of forthcomingGEF funding. Furthermore, domestic policiesand measures partially prohibited the importof Annex A and B substances prior to subprojectimplementation, causing the enterprises tobasically close down business (and thus stopusing ODS) or to use stockpiled materialinstead of importing virgin ODS untilimplementation. To some extent, ODSconsumption also dropped as a result of publicawareness of the ozone depletion issue, whileenterprises relying on ODS-based technologystill required financial support to successfullyconvert to sustainable non-ODS technologies.Finally, in a number of instances, it has beenreported that enterprises switched to interimtechnological solutions prior to subprojectimplementation. For example, in several foamprojects, HCFC-141b was used prior toconversion to the ultimate solution (e.g.,cyclopentane).

Phasing out demand

In all these cases, official data might show fullimplementation of the phase-out while demandfor ODS still exists and needs to be phased outto ensure a stable situation. Under these cir-cumstances, GEF support has been crucial toproduce a sustainable, environmentally benign,and economically acceptable solution. TheGEF projects have been most helpful in realiz-ing phase-out of Annex A and B substances andsustaining this phase-out by reducing the de-mand for these ODS. Denial of crucial GEFsupport might have amounted to a penalty forearly domestic action and commitment to ODSphase-out by recipient countries. The same mayhold for those countries that are still finalizingtheir country programs. If sufficient funds donot become available for them, there is a dan-ger that outdated technology that not only re-lies on ODS but also has other environmental

drawbacks (e.g., low energy efficiency) willcontinue to be used, despite the willingness tocomplete ODS phase-out.

Supporting non-investmentactivities and their effects

GEF support has not only had a direct appraisedimpact of 18,600 ODP tons on ODS phase-outby implementing investment subprojects. Inaddition, GEF support has produced desirableeffects that support phase-out efforts throughnon-investment activities. These non-invest-ment contributions to the reductions since thebase years of the CP documents (from 66,000ODP tons to less than 15,000 ODP tons in 1997;see Tables 1 and 3) come about in at least twoways:

1. Institutional strengthening and othersupporting activities have been part ofGEF support in virtually all recipientcountries. Institutional strengthening andtraining activities, including the relatedregional activities of UNEP, have assistedcountries in developing legislativeframeworks for implementing the phase-out adapted to their specific circumstances(see Section 3) and in overcominginformational barriers hindering thephase-out process (not least in theservicing sector). These components havebeen essential to make the investmentsubprojects part of an overall strategy forODS phase-out. The build up of institu-tional capacity and the establishment ofinformation exchange has also enhancedsome of the positive side effects, such asthe dissemination of project lessons andmutual learning. Overall, the effectivenessof GEF support must be measured not onlyin ODP tons phased out by investmentsubprojects, but in supporting activitiesrelated to creating suitable policyframeworks (see also Section 7).

2. GEF support also has enhanced thecommitment by recipient countries. GEFsupport has only covered the most difficult

The Contribution of the GEF

12


part of the ODS phase-out that could nothave been implemented withoutassistance. The remaining parts of thenational phase-out strategy as developedby the CEITs themselves had to beimplemented by domestic means. In thisway, GEF activities spurred domesticaction and had a catalytic effect. As oneresult, countries that completed their GEFprojects have been enabled to design andimplement follow-up activities, ensuringthat ODS phase-out is continued andsustained. This has included publicawareness campaigns, specific legislationand further development of recovery andrecycling schemes (for example, inHungary, the Czech Republic andBulgaria).

Limits to quantifying non-investment activities and theireffects

Both above-mentioned effects are interrelatedin that institutional strengthening alsocontributes to enhancing commitment. Thecombined impact of these effects cannot bequantified because suitable methodology islacking. Related efforts to evaluate the effectof supporting activities have been initiatedunder the Multilateral Fund for theimplementation of the Montreal Protocol, buthave not yet led to tangible results that wouldallow for a quantification. It also should benoted that a certain amount of the reductionsachieved since the initiation of GEF's supportfor ODS phase-out in CEITs has been the resultof the economic transition in the recipientcountries and cannot be attributed to GEFassistance. On the basis of available data, noneof these effects can be quantified.

The case of recovery andrecycling

The learning process supported by GEFactivities has been especially relevant torecovery and recycling (R&R) efforts, where

hard lessons had to be learned about thenecessary conditions for success. Lateractivities in this area have without doubtbenefited from the experiences in some of theearly GEF projects (e.g., the Czech Republic).This has resulted in UNDP requiring recipientcountries to have legislation in place forcontrolling the import of ODS and ODS-basedequipment before any R&R schemes areimplemented. In this area, the interdependencebetween subproject implementation andsupporting activities (legislation) becomesmost obvious.

Preparation and implementation of RefrigerantManagement Plans, as is done in Article 5countries under the Multilateral Fund todevelop a sectoral strategy at the national level,should provide an option to be pursued further.Such an integrated approach implies trainingin good practices, recovery and recycling andselective retrofitting combined withimplementing appropriate policies andmeasures including economic instruments.

6. PROBLEMS AND

CHALLENGES

The main problems

CEITs, the GEF Secretariat and ImplementingAgencies have faced various problems inimplementing the respective projects for ODSphase-out:

1. Delays of different lengths have beenfaced in the implementation of countryprograms.

2. The refrigeration servicing sector hasposed special problems that the implemen-tation of R&R schemes has addressed withonly partial success.

3. CEITs still have to address the phase-outof HCFCs and methyl bromide following

13

the schedules that apply to industrializedcountries under the Montreal Protocol.

These problems have been addressed and re-solved to varying degrees.

Problem 1 - Delays

The shortest time lag achieved between thefinalization of a CEIT country programdocument and the start of implementation ofthe corresponding GEF project was less thanone year in some of the more recent cases (e.g.,Azerbaijan and Uzbekistan). In other cases, thetime lag was several years (see Table 3). Thereare various reasons for these delays in thedifferent cases:

• Especially in the early phase of GEFassistance in the first half of the 1990s,experience had to be gained and regularprocedures for project preparation,approval and implementation had to bedeveloped. This necessitated some amountof re-planning in some cases.

• Several steps are required in the usualproject cycle before implementation canbegin. At a minimum (not including timerequired for country program preparation),this has included finalization of the coun-try program document, adoption of thecountry program by the recipient country'sgovernment, adoption of the GEF projectby the GEF Council, CEO endorsementand signature of the grant agreement. TheWorld Bank has additional procedures forinternal approval (i.e., presentation of theproject to its Board). These steps requiretime that should be accounted for in theplanning.

• Furthermore, the special transitory andeconomically unstable circumstances inmany CEITs have contributed to the delaysexperienced, as projects needed to beadapted to the changing circumstances.Financial viability of the enterprises

involved in investment subprojects hasbeen a particular concern. This problemhas at times delayed not only the start ofGEF project implementation (because ofthe continual need for re-planning), butproject completion (as some re-planninghas been necessitated even in theimplementation phase).

• Since the mid-1990s, the GEF also hasrequired that recipient countries ratify theLondon Amendment of the Montreal Pro-tocol as a necessary precondition for re-ceiving support (see GEF OperationalStrategy of 1995). This has taken addi-tional time in the case of some countries.

The delays have contributed to slowing downthe phase-out as anticipated at the time offinalization of the country program document.For example, the consultants preparing theUkraine country program in 1995 anticipatedcompleting its phase-out by the end of 1997.The Ukraine government, upon adopting thecountry program a year later, envisagedcompleting the phase-out by the end of 1999.However, due to the large delay in theimplementation of the Ukraine GEF project,phase-out was ultimately rescheduled to 2002.

Problem 2 - Refrigerationservicing

The major sector posing problems incompleting and sustaining the phase-out ofAnnex A and B substances in virtually all CEITsis refrigeration servicing. This is also evidentfrom the fact that the dominant part ofconsumption of Annex A and B substancesincreasingly consists of CFCs (A I) used asrefrigerant (see Figure A). As drop-insubstitutes for the relevant applications arerarely available, demand persists for thelifetime of existing ODS-based equipment.

Anticipating the challenge, most GEF projectsfor ODS phase-out in CEITs include R&R sub-projects to ensure limited supply of refrigerant

Problems and Challenges

14


for residual demand. Experience with theimplementation of R&R subprojects is, how-ever, mixed at best.

• Various problems have been faced. Forexample, in the Czech Republic,refrigerant has been recovered but notdelivered to reclamation centers, becausethe free-market price of the refrigerant washigher than the redemption rate paid totechnicians. In other cases, the price ofvirgin material has been so low thatrefrigeration technicians had no incentiveto recover the refrigerant, even when well-trained and equipped with GEF assistance.

• As mentioned, UNDP now requires thatCEITs implement legislation to controlimports of ODS and ODS-basedequipment as a precondition for theimplementation of R&R subprojects.Also, preparation and implementation ofintegrated Refrigerant Management Planscan provide a suitable instrument. Finally,UNEP (with GEF funding) has workedwith CEITs in a regional context toimprove the legislative frameworkconditions. These and other supportingactivities (including regular monitoringand evaluation after completion of R&Rtraining and supply of equipment) areexpected to improve the situation.

• In various cases, this will not suffice formeeting the residual demand after theofficially committed phase-out date.

• One solution to this problem might bestockpiling of limited amounts of CFCsprior to official phase-out. This is astrategy already pursued by the RussianFederation in meeting its commitment tophase-out production and consumption ofAnnex A and B substances by mid-2000despite the delays and problems faced in

the implementation of its GEF Project.Obviously, such stockpiling might enablefurther, and may thus prolong, ODSconsumption/use. At the same time, itcould enable CEITs that are still in thephase-out process to come intocompliance. Limited stockpiling mightthus avoid economic disruption and at thesame time create certainty bothdomestically and internationally withrespect to future ODS use. While someamounts would be available for future use,these would be clearly limited, and anyfurther increase (by way of imports) wouldbe prohibited. This might also representan attractive alternative to continued CFCimports for many of the CEITs concernedgiven that Russian CFC production (themajor source of imports in many CEITs)is set to close down in 2000. Stockpilinghas also been a common practice in mostOECD countries in the ODS phase-outprocess.

Problem 3 - HCFCs and methylbromide

Looking beyond the phase-out of Annex A andB substances, CEITs have also committed, inmost parts, to limit and reduce production andconsumption of HCFCs (Annex C I) and methylbromide (Annex E I) in line with the phase-outschedules applicable to industrialized countriesunder the Montreal Protocol. Many of thesecountries have already achieved significantprogress. As Figure B indicates, consumptionof these substances has increased modestly.(The large peak in methyl bromideconsumption in 1994/95 is due to large importsreported by Russia.) In contrast, HCFCconsumption especially has increasedsignificantly in most other industrializedcountries in the 1990s. There can be little doubtthat continued effort will be needed to achieveeventual phase-out of these substances inCEITs.

15

7. LESSONS LEARNED

FOR FUTURE GEFACTIVITIES

Despite the problems described, the GEF'sozone-related activities have been generallysuccessful to date in achieving their objective,i.e., enabling compliance with the MontrealProtocol by CEITs. With a reasonable degreeof certainty, this achieving this objective canalso be expected in non-compliant CEITs whereGEF projects are currently under implementa-tion. The success of GEF's ozone program islargely the result of its special design features,which might serve as examples and blueprintsfor future GEF activities (in the ozone area orothers). Two common themes, domestic com-mitment and an integrative approach, providea "red thread" across the four design features

that have enabled a successful operation ofGEF's ozone program:

1. Creation and enhancement of domesticcommitment to the environmental goalspursued, which has been furthered byensuring active involvement of the countryin project development and implementa-tion and by creating relevant institutionalcapacity;

2. Integration of subprojects in a sectoralstrategy that is itself integrated into acountry-wide approach;

3. Integration of problem-specific activitiesin a broader effort to build capacity anddevelop a suitable policy framework; and

4. Integration of problem-specific solutionsin a comprehensive approach that consid-ers the further environmental externalitiespotential solutions might have.

Figure B: Consumption of Annex C and E Substances in CEITs from1989/91 to 1997

Note: The time series was included only when data for at least half of the years was available. The figure is thusbased on incomplete data.

0

500

1,000

1,500

2,000

2,500

1989 1990 1991 1992 1993 1994 1995 1996 1997

years

OD

P to

ns

C I

E I

Lessons Learned for Future GEF Activities

16


Lesson 1 - Domesticcommitment

Whereas the country strategy was generallyelaborated with GEF support, the countryprogram was to be adopted formally by therespective country. This, in turn, enhanced thecommitment by the country to ODS phase-outand activities envisaged to achieve it. Thiscommitment has been needed because GEF hasnot covered all the costs of implementing thestrategy (or country program). GEF support hasbeen granted primarily for the most difficultpart of ODS phase-out and has focused on thoseactivities that could not have been pursuedwithout assistance. The recipient country hadto take responsibility for implementing theremainder. The GEF grant was thus used toenhance country commitment and catalyzedomestic efforts. As a result, relative to totalconsumption of Annex A and B substances inthe year of the appraised phase-out, the costeffectiveness of the GEF grant was US$2.17per ODP kg. This compares to an overall costeffectiveness of roughly US$7.5 per ODP kgof appraised phase-out in the subprojects.

Lesson 2 - Integratingsubprojects into sector andcountry strategies

GEF activities enabling compliance with theMontreal Protocol have started from a coun-try-wide program complemented by sector ap-proaches to ODS phase-out. The approach hasthus been both integrated and specific regard-ing concrete phase-out activities.

Lesson 3 - Integrating the GEFproject in general capacitybuilding

The GEF projects in CEITs also took anintegrated approach to implementation inaddressing economic as well as political andlegal obstacles. Institutional strengthening andthe development of suitable policies and

measures have been integrative parts of GEF'sactivities. The results of this approach arevisible in the list of policies and measuresimplemented and planned to be implementedin CEITs to support ODS phase-out (seeTable 2). The importance of suitable policyframeworks has been most obvious with respectto recovery and recycling projects (see above).As many of the problems addressed are of atrans-border character, it has also proven mostuseful to coordinate such policy developmentregionally. Such regional policy developmenthas been facilitated and supported effectivelyby UNEP's regional activities.

Such institutional strengthening has greatlyassisted recipient countries in creating capacityfor pursuing ODS phase-out and enhancingcommitment to this objective. On this basis,sustaining the ODS phase-out after completionof the GEF Project has been facilitated.Countries with completed GEF projects havebeen enabled to design follow-up activities inorder to further ensure that ODS consumptionis phased out. Such activities have encom-passed public awareness campaigns, specificlegislation and further development of recoveryand recycling schemes (see, for example,Hungary, Czech Republic and Bulgaria).

Lesson 4 - Integrating ODSphase-out with otherenvironmental objectives

The GEF strategy on ODS phase-out has alsobeen innovative in taking an integrativeapproach towards global environmentalproblems. In particular, the GEF OperationalStrategy of 1995 demanded “the conversion tothe technology with the least impact on globalwarming that is technically feasible, environ-mentally sound and economically acceptable.”The result of this guideline for creating synergyhas, however, been mixed. On the one hand,only two investment subprojects were plannedto use HCFCs instead of CFCs. On the otherhand, according to available project documents,all refrigeration projects foresaw use of HFC

17

refrigerants as substitutes (irrespective ofwhether they were planned before or afteradoption of the GEF Operational Strategy). Theintegrated approach has thus been implementedin practice only partially at best. This points tothe need to closely monitor subproject planningto ensure that clients are aware of the preferredoptions and applicable guidelines are observed.

Conclusion

The aforementioned design features andcommon themes of integration and enhancingcommitment in recipient countries should berelevant for the development of other existingor upcoming areas of GEF activities. Theymight inform and provide suitable blueprintsfor the design of appropriate activities,particularly in areas that share commoncharacteristics with the Montreal Protocol. Inthis context, it is noteworthy that the problemsof using persistent organic pollutants (POPs),

for which a global agreement is undernegotiation, have broad similarities to problemsassociated with ODS. As they concernchemicals as well, they might be suitable forsimilar sectoral strategies as those developedand applied in the context of the MontrealProtocol. At the same time, an integratedapproach to phasing out POPs should bebeneficial to avoid the negative environmentalexternalities of implementing potentialsolutions and to exploit the potential forsynergies. Beyond POPs, however, the lessonslearned in the context of ODS phase-out shouldalso be relevant to the established areas ofGEF's activities, such as climate change andbiological diversity. These generally requirecomprehensive efforts and commitments byrecipient countries as well as an integrative andcomprehensive approach towards solutions.GEF's ozone program provides importantlessons and an example of how to successfullypursue these goals.

Lessons Learned for Future GEF Activities

ANNEXES

COUNTRY REVIEW SUMMARIES

21

Status of ratification

The Republic of Azerbaijan ratified theVienna Convention and the MontrealProtocol, including its London andCopenhagen Amendments on June 12, 1996.

Country program

The CP, elaborated with the assistance ofUNEP and UNDP, was finalized and approvedby the government of Azerbaijan in January1998. Azerbaijan does not produce or exportODS. In 1996 (the base year of the CP),Azerbaijan reported total ODS consumptionof 965.7 ODP tons. Of this amount, CFCsand halons accounted for roughly half each.The CP foresees a phase-out of CFCs and

halons by 2000, with minor amounts requiredfor servicing until 2005. Implementation is atan early stage, but slight delays have occurred.

The GEF assistance

The GEF Council approved the GEF project inMarch 1998. CEO endorsement followed inOctober 1998 and the grant agreement wassigned in February 1999. UNDP is the imple-menting agency for the investment subprojects,and UNEP is implementing the institutionalstrengthening and training components. TheGEF project is expected to phase out 307.4 ODPtons in total (32% of 1996 consumption). Thetotal cost of the GEF project is expected to beUS$8,975,515, of which US$6,749,515 (75.2%)would be covered by a GEF grant. The ratio of

Figure 1: Consumption of Annex A and B Substances and the GEFProject in Azerbaijan from 1996 to 2002

GEFsubprojects

GEFProject

Ratification

0

200

400

600

800

1,000

1,200

1996 1997 1998 1999 2000 2001 2002

year

OD

P to

ns

Refrigeration

Halons

projected consumption/use

Solvents

CEO endorsement

Montreal Protocol,London Amendment,

Copenhagen Amendment

planned completion of GEF project

(originally) (currently)

start of implementation

1. AZERBAIJAN

22


the GEF grant and ODS consumption in 1996is US$7.03/ODP kg. The GEF project consistsof six subprojects: One institutional strength-ening subproject, four investment subprojectsin the refrigeration sector and one investmentsubproject addressing fire-fighting. In Febru-ary 1999, implementation of the GEF projectin Azerbaijan has gone forward full steam.Implementation of all investment subprojectswas originally scheduled to be completed bythe end of 2000.

Policies and measures

Azerbaijan has established a National OzoneCentre and banned the import of halons in 1997.Furthermore, quotas for CFC imports have beendefined. Meanwhile, a framework regulationon import taxes on ODS (based on the ODP ofthe imported substance), a ban of the import ofODS-based equipment and a licensing systemto monitor and control ODS imports are beingprepared. Finally, a system for licensing op-erators in the refrigeration servicing sector isbeing prepared and is scheduled to be estab-lished with a recovery and recycling subprojectand with the training in good practices.

Status

Azerbaijan has submitted all data requiredunder Article 7 of the Protocol. These data andpreliminary data for 1998 provided byAzerbaijan indicate that Azerbaijansignificantly reduced its consumption of CFCsin 1997 and 1998 (see graph). By 1998, itappears to have phased out halons and methylchloroform. CFCs continue to be used inrefrigeration (about 90%) and as solvents(about 10%). Furthermore, a large part of CFCconsumption is devoted to refrigerationservicing, which is an area particularly difficultto control. Demand in this area might persistbeyond 2001. The total phase-out of CFC

imports already by the end of 2000 will thuspose a considerable challenge to Azerbaijan.Illegal trade in ODS has been estimated atapproximately six tons in 1998.The subprojectsof the GEF project are currently scheduled tobe completed in 2001 (institutionalstrengthening: early 2002).

Future benchmarks

Based on Decision X/20 of the tenth Meetingof the Parties to the Montreal Protocol (MOP10), the following benchmarks and phase-downsteps (as developed with input from Azerbaijan)could help ensure an orderly phase out until2001. The proposed import limits are supposedto leave some room for stockpiling:

January 1, 2000: Import/export licensingsystem in place; tax on the import of ODSintroduced; system for licensing of refrigerationservicing technicians established; ban onimport of ODS-based equipment; import quotafor CFCs not exceeding 90.7 ODP tons.

January 1, 2001: CFC import quota for 2001zero ODP tons; effective system for monitor-ing and controlling ODS trade in place andworking.

July 1, 2001: All investment subprojects(including recovery and recycling) completed.

July 1, 2002: GEF project completed.

Decision X/20 had recommended introductionof an ODS import and export licensing systemby 1 January 1999 and consideration of a banon the import of ODS-based equipment by1999. To address the problems in the refrigera-tion sector, the government could aim at stock-piling a certain amount of CFCs for use afterthe year 2000.

23

Annexes


Belarus ratified the Vienna Convention on June20, 1986, and the Montreal Protocol on Octo-ber 31, 1988, both as part of the former SovietUnion. On June 10, 1996, it also ratified theLondon Amendment. It has yet to ratify theCopenhagen Amendment.

Country program

With assistance from the Danish government(plus a GEF project preparation advance)Belarus' CP was finalized in May 1995 and thegovernment approved the resulting nationalprogram on ODS on February 19, 1996. Belarusdoes not produce ODS, but is dependent onimports from Russia for its own supplies. In1994 (the base year of the CP), Belarusconsumed about 1,000 ODP tons of ODS,

whereof about 90% was CFCs (A I and B I).ODS were consumed in Belarus in all knownuser sectors. The refrigeration sector wasdominant, accounting for approximately 84%.Under the assumption that financial assistancewould be forthcoming in mid-1995, the CPplanned the ODS phase-out to be achieved bythe end of 1997. Carbon tetrachloride, methylchloroform and halons were even to be phasedout one year in advance to that schedule. Sincethe GEF project became operational only inmid-1997, the CP phase-out schedule waspostponed for two years.

GEF assistance

The GEF Council approved the GEF projectin April/May 1996 and CEO endorsement wasgranted in April 1997. The World Bank as theresponsible implementation agency approved

2. BELARUS

Figure 2: Consumption of Annex A and B Substances and the GEFProject in Belarus from 1994 to 2000

GEFsubprojects

GEFProject

0

200

400

600

800

1,000

1,200

1994 1995 1996 1997 1998 1999 2000

year

OD

P to

ns

Refrigeration

SolventsFoams

Halons projected consumption / use


London Amendment


(currently) (originally)

Montreal Protocol (1988)

CEO endorsement

Ratification

24


the projects in May 1997 and granteffectiveness was achieved in August 1997. TheGEF project is thought to have phased out 619.7ODP tons in total (62% of 1994 consumption)at an expected total cost of US$15,727,658, ofwhich US$6,893,154 (43.8%) would beprovided by a GEF grant. The ratio of the GEFgrant and ODS consumption in 1994 isUS$6.85/ODP kg. The GEF project in Belarusentails a total of eight subprojects. Theinvestment component consists of sixsubprojects, of which four belong to thesolvents sector and two to the refrigerationsector. The technical assistance componentcomprises two subprojects (transfer oftechnology and training, institutionalstrengthening). One subproject in therefrigeration sector accounts for more than halfof the total appraised phase-out of 620 ODPtons. The GEF project envisages the followingsectoral phase-out dates: 1/1999: refrigerationmanufacturing; 12/1999: refrigerationservicing and fire protection; and 12/1998:solvents.


In July 1997, a National Ozone Office wasestablished within the Ministry ofEnvironment. In August 1997, Belarusestablished an import and export licensingsystem for ODS and products containing ODS.It has banned the ODS export, introducedimport quotas and also set up an import fee ofUS$1.5 per kg of CFCs imported. Theestablishment of an Interagency Commissionon ODS is envisaged.

Status

Belarus has supplied all data required underArticle 7 of the Montreal Protocol. Between1994 and 1998, Belarus reduced its ODS con-

sumption by 71.5% (halons -79%, CFCs -71%).However, the data show non-compliance withits control obligations under the Protocol in1996, 1997 and 1998. Implementation of theGEF project started in the second half of 1997.All investment subprojects should be com-pleted by the end of 1999. Two years passedbetween finalization of the CP document andthe start of implementation. As in other CEITs,the refrigeration servicing sector is expectedto remain a major challenge even after the en-visioned phase-out. Belarus has noted that ademand of about 170 ODP tons per year existsin the agricultural sector for refrigeration ser-vicing (close to half of total CFC imports in1997). It appears questionable whether thisdemand can be met by recovery and recycling.

Outlook

MOP 10 in 1998 officially took note of thecommitment to phase out the consumption ofAnnex A and B substances by January 1, 2000(Decision X/21). However, there will beresidual demand for CFCs beyond the officialphase-out date. To prevent continued non-compliance and avoid economic disturbances,Belarus could import some CFCs beyonddemand in 1999 in order to have stocksavailable after phase-out. As the existing feeon CFC imports constitutes a strongdisincentive for importers/wholesalers toengage in such stockpiling, this would requirea government initiative. Further measures needto be taken to reduce CFC demand for servicingespecially in the agricultural sector. Belarus hasindicated that 90% of refrigeration equipmentin agriculture need to be converted/replaced.It has asked for further GEF assistance toaddress the problem. If no solution is found,there will be strong incentives for engaging inillegal imports.

25

Annexes


Bulgaria acceded to the Vienna Convention andthe Montreal Protocol on November 20, 1990,and ratified the London and CopenhagenAmendments on April 28, 1999.

Country program

The CP was finalized in May 1994 andsubsequently adopted by the Bulgariangovernment on August 14, 1995. Bulgaria hasneither produced nor exported ODS (althoughre-exports might have occurred in the past). Forits own supplies, it has drawn on imports mainlyfrom the EU. In 1992, the base year of the CP,Bulgaria consumed 1,360 ODP tons of AnnexA and B substances. Bulgaria envisaged

complying with the Montreal Protocol phase-out schedule and was thus aiming at a phase-out of Annex A substances by the end of 1995(1993 in the case of halons). The CP estimatedthat phase-out in the aerosol and non-refrigeration foam sectors might be achievableby 1995, while the other sectors would followby the end of 1995.

GEF assistance

The GEF Council approved the GEF projectin May 1995. CEO endorsement was receivedin September 1995. The grant agreement wassigned in December 1995 and ratified by theBulgarian Parliament in March 1996. It enteredinto force on May 14, 1996, with the WorldBank as the implementing agency. Some 334.4

3. BULGARIA

Figure 3: Consumption of Annex A and B Substances and the GEFProject in Bulgaria from 1992 to 1999

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26


ODP tons in total are expected to be phasedout by the project. The corresponding total costis estimated at US$13,272,332, of whichUS$10,552,315 (79.6%) was granted by theGEF. The ratio of the GEF grant and the aver-age of total consumption of ODS in 1993/1994is US$14.47/ODP kg. The Bulgarian GEFproject consists of 15 subprojects. The projectencompasses 11 investment subprojects, fiveeach in the refrigeration and foam sectors andone in the solvent sector. It also includes aninstitutional strengthening subproject and acomponent (3 subprojects) providing for train-ing and recovery and recycling. The appraisedODS phase-out equals a little less than half of1993/94 consumption of Annex A and B sub-stances. Actual use of ODS in the subprojectswas about 30% of total reported consumptionof Annex A and B substances in 1994. Fullimplementation was originally foreseen to bereached in early 1998.


Bulgaria has set up an ODS Task Force and anational ozone unit within the environmentministry. As of January 1996, Bulgaria bannedimports of Annex A and B substances as wellas the import of products and equipment con-taining them. The environment ministry oper-ates a permit system for the import of otherODS. It has also established an ODS importand export licensing system. This is being fur-ther developed within the framework ofUNEP's regional activities. ODS detection andidentification equipment is stationed at customscross-points and regional environmentalinspectorates are already established. Startingfrom January 1, 2000, the entire CFC trade willbe allowed only through these cross-points. Theozone office expects this measure, in additionto the fact that CFC-12 is already being recov-ered and recycled, to stop illegal CFC imports.Bulgaria also conducted a public awarenesscampaign.

Status

Bulgaria has provided all data required underArticle 7 of the Montreal Protocol. By 1998,Bulgaria had achieved a complete phase-out ofAnnex A and B substances. The data showminor imports of halons from 1995-1997 for"essential needs" and CFCs in 1996 represent-ing cases of technical non-compliance. ODSuse in the subprojects dropped by 70-80% from1994 levels, and three of the five subprojectsin the foam sector had phased out use of AnnexA and B substances before implementationstarted. Implementation of the GEF project wasdelayed due to the serious economic crisisexperienced by Bulgaria in 1996/97. Actualimplementation started in February 1997. Thevarious subprojects have continued to use ODSbeyond 1996 by using stocks built up prior tothe enforcement of the CFC import ban of 1996.It is suspected that ODS have been illegallyimported, although clear evidence for suchactivities has not yet been found. Remainingdemand for CFCs especially in refrigerationservicing is to be met by recovery and recycling.

Outlook

The GEF project is scheduled to be fully imple-mented by the end of October 1999. Despitethe delay experienced, implementation of theBulgarian GEF project has been relativelytimely. It appears to have been successful inphasing out ODS imports, although there aresome indications that demand for ODS contin-ues to exist, which may be supported by illegalactivities. If implementation of the recovery andrecycling project is successfully completed intime, it may help meet existing demand. Nev-ertheless, supportive activities (e.g., raisingpublic awareness) may still be needed, espe-cially in a regional context, after completionof the GEF project to make ODS phase-out inBulgaria continuous.

27

Annexes


As a successor state of Czechoslovakia, theCzech Republic became a Party to the ViennaConvention and the Montreal Protocol on Janu-ary 1, 1993, and acceded to the London andCopenhagen Amendments on December 18,1996.

Country program

The Czechoslovakian CP was finalized inAugust 1992. The Czech Republic producedand exported CFCs and carbon tetrachloride.In 1991, the base year of the CzechoslovakianCP, consumption of the former CSFR equalled3,730 ODP tons. The Czech Republic (as onesuccessor state)- determined that it had a shareof 66% (2,475 ODP tons) of theCzechoslovakian total. More than 90% of thisconsumption was CFCs. The Czech Republicdetermined that ODS consumption in 1991 was

more than 50% for aerosols and more than 30%in refrigeration. The CP foresaw completionof the ODS phase-out by the end of 1996 andrecommended the following sectoral phase-outdates: aerosols: end of 1993; refrigeration: endof 1996; foams: end of 1995; solvents: end of1995; halons: end of 1996. The Czech Republiclater committed to a total ODS phase-out inline with the Montreal Protocol schedule, i.e.,by 1996.

GEF assistance

The GEF Council approved the GEF projectin December 1992 and CEO endorsement wasgiven in August 1994. Implementation with theWorld Bank as the implementing agency startedin December 1994 and was completed atMarch 31, 1998. The GEF project was expectedto phase out 390.0 ODP tons in total. The GEFgrant (US$2,412,000) provided for 58.5% ofthe total cost of the project of US$4,121,000.

4. CZECH REPUBLIC

Figure 4: Consumption of Annex A and B Substances and the GEFProject in the Czech Republic from 1991 to 1998

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Aerosols


28


The ratio of the GEF grant and total consump-tion in 1993 is US$2.15/ODP kg. The GEFproject consisted of five subprojects (four in-vestment and one institutional strengthening).Including a recovery and recycling subproject,there were two subprojects in the refrigerationsector and one in the foam sector; one sub-project was abandoned. The appraised phase-out of 390 ODP tons constitutes about 35% ofthe 1993 total consumption. Based on 1993 fig-ures, the GEF project was thus to eliminate 50%of total consumption in the refrigeration sec-tor and 30% in the foam sector. The originalimplementation schedule envisaged completionof the project by mid-1996.


In January 1993, the Czech Republic bannedthe use of CFCs as propellants (except for es-sential uses). The Czech Republic introducedan ODS import and export licensing systemincluding import quotas for ODS and ODS-containing equipment in January 1996, whenthe manufacturing, import and export of CFCs,including products containing them, were alsoprohibited. Essential uses have been approvedfor 1996-99. The Czech Republic introducedan excise duty on the production and import ofAnnex A and B substances of approximatelyUS$3 per kg in 1994. In 1995, this tax was alsoapplied to HCFCs and methyl bromide and thetax rate increased to approximately US$6 perkg. In addition, several workshops were orga-nized as part of the Czech GEF project between1996 and 1998. The Czech Republic is con-tinuing its work on developing the legislativeframework for ODS control further (also withinthe context of UNEP's regional activities).

Status

The Czech Republic has submitted all data re-quired under Article 7 of the Montreal Proto-col. A near phase-out of Annex A and Bsubstances was achieved by 1996, but residualproduction and consumption of CFCs, carbontetrachloride and halons in 1994-1997 techni-cally represented non-compliance. Accordingto the Czech Republic, residual production and

consumption was due to essential uses (notapproved by the Parties), laboratory uses anduse as feedstock. The Czech GEF project wascompleted in March 1998. The performanceof the recovery and recycling subproject espe-cially has been only partially successful. Whilethe envisaged amount of CFCs (200 tons) mayindeed be recycled by refrigeration technicians,only a fraction of that is delivered for reclama-tion as planned. This has been due to the priceof CFC-12 on the free market that has beenabout three times as high as the price offeredby the reclamation centers. Some aspects of theother investment projects will also need fine-tuning for optimal functioning as a follow-upto the GEF project.

Concluding assessment andoutlook

The Czech GEF project is one of the first suc-cessfully completed ODS phase-out projects inthe world. Representatives of the Czech Re-public have participated in various internationalmeetings sharing the experience of the firstGEF project for ODS phase-out with others.Some residual consumption and demand forAnnex A and B substances need to be ad-dressed. The Czech government is followingup its activities related to ODS phase-out, inparticular in the context of the process of ac-ceding to the EU. The GEF project facilitatedthe introduction of non-ODS technology andthus helped reduce the demand for ODS thatmight otherwise have sought CFC supplies viaillegal imports. In addition, the technical as-sistance enabled the country to identify bestinternational practice.

From the recovery and recycling subproject, ithas been learned that the financial incentive totechnicians is most important for the function-ing of such a scheme, that this incentive shouldbe easily adaptable and that the commercialrefrigeration sector should be the primary fo-cus of activities. Making the recovery and re-cycling scheme reach its anticipated capacityremains a challenge. The Czech Ministry ofEnvironment wants to address the shortcom-ings in particular by special training activities.

29

Annexes


Estonia acceded to both the Vienna Conven-tion and the Montreal Protocol on October 17,1996. It ratified the London and CopenhagenAmendments on April 12, 1999.

Country program

A first version of the CP was finalized inNovember 1997. As of October 1999, the fi-nal CP was being updated and finalized. Esto-nia does not produce ODS, but CFCs appear tohave been trans-shipped through Estonia (es-pecially from Russia to Western Europe). ItsODS consumption (imported mainly from Rus-sia) has been dominated by Annex A sub-stances. In the 1980s and early 1990s, CFCsaccounted for about 60% and halons for about40% of annual consumption. According to the

CP, the refrigeration sector accounted for thebulk of ODS consumption in 1996 (29.7 ODPtons or 86%). According to available data,Estonian ODS consumption dropped fromabout 310-320 ODP tons of Annex A and Bsubstances in 1986/89 to about 45 ODP tons in1997 (a reduction of roughly 85%). The CP of1997 forecasted that consumption of Annex Aand B substances would fall to 22 ODP tons in1998, to 10 ODP tons in 1999 and to less than4 ODP tons in 2000. This planning appears tohave changed in the interim due to the delay inimplementing the CP.

GEF assistance

Once the envisaged GEF project is approved,UNDP and UNEP will act as implementingagencies in their respective capacities. Accord-ing to the country program of Estonia being

Figure 5: Consumption of Annex A and B Substances and the GEFProject in Estonia from 1996 to 2002

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5. ESTONIA

30


finalized in October 1999, the envisaged GEFproject would consist of four subprojects cov-ering institutional strengthening, training inmonitoring and control of ODS, training oftrainers in good practices in refrigeration andrecovery and recycling.


The Estonian Environment Ministry has estab-lished a national ozone team and a NationalCountry Program Team in which other institu-tions are involved as well. Estonia also startedto set up an ODS import and export licensingsystem, but had not established import quotasin late 1998, when it was planning to establishfurther control measures on trade in ODS. Ithas participated actively in the regional activi-ties of UNEP.

Status

Estonia has submitted full data under Article 7of the Montreal Protocol. Estonia was thus innon-compliance with the Montreal Protocol in1997. Following the ImplementationCommittee's recommendation, MOP 10 as-sessed Estonia to have been in non-compliancewith its obligations in 1996 as well (DecisionX/23), although the Protocol was not in forcefor Estonia in that year and it would not havebeen obliged to submit data under Article 7.

Outlook and future benchmarks

Estonia is committed to phasing out consump-tion of Annex A and B substances by 2002. Byratifying the London Amendment in April 1999,Estonia has removed one of the major remain-ing obstacles for receiving GEF assistance. Pro-vided that project preparation is completed ina timely way, implementation of the GEFproject could start in early 2000. This shouldenable Estonia to meet its own deadline. Thetenth MOP accepted the following milestoneson the way to total phase-out:

January 1, 1999: Consumption of Annex Aand B substances in 1999 not to exceed 23 ODPtons; a harmonized system for monitoring andcontrolling ODS imports established.

January 1, 2000: Total phase-out of consump-tion of Annex B substances; consumption ofAnnex A substances not to exceed 14 ODP tonsin 2000.

January 1, 2001: Total consumption of CFC-12 not to exceed one ton in 2001.

January 1, 2002: Zero consumption of An-nex A and B substances.

31

Annexes

Figure 6: Consumption of Annex A and B Substances and the GEFProject in Hungary from 1993 to 1998

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6. HUNGARY


Hungary ratified the Vienna Convention onMay 4, 1988, and the Montreal Protocol onApril 20, 1989. It approved the London Amend-ment on November 9, 1993, and acceded to theCopenhagen Amendment on May 17, 1994.Hungary ratified the Montreal Amendment onJuly 26, 1999.

Country program

The CP was finalized in September 1994 andsubsequently adopted by the Hungarian gov-ernment. Hungary has neither produced norexported ODS (except for minor re-exports).Its supplies were mainly imported from the EU.In 1993, the base year of the CP, total ODS

consumption was roughly 1,920 ODP tons.Roughly 75% of 1993 consumption was CFCsand more than 20% halons. In 1993, refrigera-tion accounted for about a third of total con-sumption; foams for 30%; halons, aerosols andsolvents for more than 10% each. The objec-tive of the CP was to realize total ODS phase-out by 1996, i.e., in compliance with theMontreal Protocol.

GEF assistance

The GEF Council adopted the GEF project inMay 1995 and CEO endorsement was given inautumn 1995. Implementation started at the endof 1995. The World Bank assisted Hungary inthe implementation of ODS phase-out as theimplementing agency. The Hungarian GEF

32


project was expected to phase out 1,156.37ODP tons in total (more than 60% of 1993 con-sumption). The costs for implementationamounted to US$8,208,800, of whichUS$6,497,300 (79.2%) was to be provided bya GEF grant. The ratio of the GEF grant andtotal consumption in 1993 is US$3.50/ODP kg.The Hungarian GEF project consisted of 14subprojects: an institutional strengthening sub-project, a recovery and recycling scheme anda series of investment subprojects. Subprojectswere undertaken in all sectors. The recoveryand recycling subproject in the refrigerationsector alone accounted for 40% of the totalexpected impact on ODS consumption. Theaerosol and refrigeration subprojects were tophase out nearly 80% and 90% of 1993 sectoralconsumption respectively. The halon sub-project was to result in an annual recovery ofmore halons than were used in 1993 due to thelarge Hungarian halon bank estimated to con-sist of about 3,000 metric tons in the CP. TheHungarian GEF project was originally sched-uled to be fully implemented at the end of 1997and was completed at the end of 1998.


Legislation on gradually phasing down andultimately phasing out ODS consumption wasintroduced in mid-1992. Upon the completionof the CP, Hungary already had in place legis-lation determining the phase-out of ODS andhad already banned ODS use as aerosols in thecosmetics industry. It also already had estab-lished an import and export licensing system,that today also determines import quotas. Thefunctional equivalent of a national ozone of-fice, a project implementation unit and a tech-nical advisory group have been set up. Hungaryintroduced a product fee for ODS refrigerantsin 1995 using part of the revenues to supportthe recovery and recycling activities. Hungary

hosted workshops and participated in othersorganized by the World Bank in a regional con-text that served to enhance mutual learning. Acoordinated public awareness raising campaignwas implemented.

Status

Hungary has provided all data required underArticle 7 of the Montreal Protocol. Ac-cordingly, Hungary has fully been in compli-ance with its control obligations. By 1996,Hungary had, according to official data, totallyphased out consumption of Annex A and B sub-stances in line with the Montreal Protocolschedule. Halon imports had already stoppedin 1994. According to the Ministry of Envi-ronment, the phase-out of the last 15-20%(about 1,200 tons) of the baseline consump-tion, which represented the technically mostdifficult and most costly part of the conversion,would not have been possible without assis-tance by the GEF. Data for 1997 show minorimports of CFCs for essential uses as approvedby the Meeting of the Parties to the MontrealProtocol. The GEF project has been fully imple-mented and was completed at the end of 1998.Concluding assessment and outlook: Overall,implementation of the Hungarian CP was rela-tively smooth. The problems in the recoveryand recycling area need to be followed in thefuture, but Hungary has shown commitment toovercoming the challenge faced by devotingadditional resources from its Central Environ-mental Fund to these activities. No major dif-ficulties in implementing the phase-out also inthe future are anticipated. Hungary is in theprocess of increasing the product fees for re-frigerants so as to increase the disincentive touse HCFCs. As one of the candidates for join-ing the European Union, it is striving to bringits ODS policies in line with EU standards.

33

Annexes


Latvia acceded to both the Vienna Conventionand the Montreal Protocol on April 28, 1995.It accepted the London and CopenhagenAmendments on November 2, 1998.

Country program

An initial CP was compiled in 1994 and ap-proved by the Latvian government in 1995. Therevised CP was finalized in March 1997. Latviadoes not produce ODS, but the country ex-ported 71 ODP tons of CFCs in 1995, the baseyear of the CP. According to the CP, this ex-port was an exception driven by short-termmarket opportunities in neighboring countries.Base year consumption was 727 ODP tons.CFCs (A I) made up more than 90%. The aero-sol sector accounted for more than 60% of thetotal of Annex A and B substances. The second

largest sector was refrigeration contributingnearly 30%. The CP envisages a phase-out ofAnnex A and B substances by 2000 (with mi-nor amounts required for servicing up until2005).

GEF assistance

The GEF project was approved by the GEFCouncil in July 1997 and CEO endorsementwas received in January 1999. As of mid-1999,the grant agreement was expected to enter intoeffectiveness during 1999. UNDP and UNEPare jointly assisting Latvia as implementingagencies. The Latvian GEF project is expectedto phase out 223.6 ODP tons (slightly less thana third of 1995 ODS consumption). The totalcost of the project is estimated atUS$1,863,919, of which US$1,657,812(88.9%) was provided by a GEF grant. The ra-tio of the GEF grant and total consumption in

7. LATVIA

Figure 7: Consumption of Annex A and B Substances and the GEFProject in Latvia from 1995 to 2002

GEFProject

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Montreal Protocol


CEOendorsement

34


1995 is US$2.33/ODP kg. The Latvian GEFproject consists of six subprojects: three invest-ment subprojects (including one recovery andrecycling) and one subproject each on institu-tional strengthening, training and demonstra-tion.


The government introduced a tax on importedODS, set at about US$1.9 per ODP kg. Train-ing activities for customs authorities and in therefrigeration sector were completed and theLatvian Association of Refrigeration Engineerswas established in 1998. Regulations on thehandling of ODS as hazardous substances werepending. An advisory and monitoring unit wasto be created in the environment ministry. Itwill oversee the ODS phase-out in the refrig-eration sector. An amendment of the relevantlegislation is to introduce provisions for, interalia, certification and qualification of techni-cians in the refrigeration sector, supervision ofrefrigeration units, and control of import andexport operations. In addition, voluntary agree-ments with ODS importers and users weresought to freeze and reduce ODS consumption.Subsequently, a ban on halons was imposed inDecember 1997. Also, Latvia has introducedan import licensing system including importquotas and intends to further improve this sys-tem by the end of 1999. It doing so, it receivessupport from UNEP in the context of UNEP'srelated regional activities.

Status

Latvia has submitted all data required underArticle 7 of the Montreal Protocol. Accord-ingly, it has been in non-compliance with itscontrol obligations since 1995 (halons and,since 1996, CFCs). From 1995 to 1997, con-sumption of Annex A and B substances declinedby about 85%. The import of halons was phasedout in 1996. GEF project implementation wasdelayed due to the pending ratification of theLondon Amendment by Latvia. As a conse-quence, the investment subprojects will becompleted by the end of 2000 at the earliest,

i.e., one year later than the date of total phase-out envisioned in the CP. In case of furtherimplementation delays, demand for illegal im-ports may increase. Demand for ODS in Latviacan be expected to persist beyond January 1,2000. It is expected that this demand will, atleast in an interim period, not be met by recov-ered material. The Latvian authorities do notsee stockpiling as a viable option, but expectthat CFC phase-out might need to be postponedas a result (for one year). This would prolongnon-compliance with the Montreal Protocol.

Future benchmarks

In 1998, the MOP 10 noted the commitment ofLatvia to phase out Annex A and B substancesby the end of 1999 and to limit CFC consump-tion to 100 tons in 1999. Despite the aforemen-tioned implementation delays, it might still bepossible to achieve this phase-out date, if lim-ited stockpiling of CFCs can be implementedby Latvia. Latvia holds, however, that someimports might be necessary in 2000. The fol-lowing benchmarks as reviewed by the Latvianauthorities can serve to measure progress inphasing out ODS and completing the GEFproject. Where differences between the limitsset by MOP 10 and the assessment by Latviaexist, these are indicated in square brackets:

1999: Import quota for CFCs (A I) not to ex-ceed 100 tons; import quota for carbon tetra-chloride (B II) not to exceed 10 tons (11 ODPtons).

January 1, 2000: Revised import/export li-censing system in place; ban of import of allAnnex A and B substances [Latvia holds thatsome import might be necessary in 2000 de-pending on the status of implementation of therecovery and recycling subproject].

July 1, 2001: Completion of investment sub-projects.

July 1, 2002: Completion of GEF project.

35

Annexes


Lithuania acceded to the Vienna Conventionand the Montreal Protocol on January 18, 1995,and ratified the London and CopenhagenAmendments on February 3, 1998.

Country program

The CP was finalized in March 1997 and ap-proved by the Lithuanian government.Lithuania neither produces nor exports anyODS. Nearly 90% of total Lithuanian ODSconsumption of 420 ODP tons in 1995, the baseyear of the CP, was Annex A and B substancesimported from Russia. Close to 97% of thesewas CFCs (A I). The refrigeration sector wasdominant by accounting for 82% of the AnnexA and B total, while aerosols contributed closeto 15%. The CP envisions a phase-out of An-

nex A and B substances by 2001 (with minoramounts required for servicing up until 2005).

GEF assistance

The GEF project received approval by the GEFCouncil in July 1997. CEO endorsement fol-lowed in April 1998 and the grant agreementwas signed in May 1998. UNDP and UNEPserve as implementing agencies. TheLithuanian GEF project is thought to phase out387.0 ODP tons in total at a cost ofUS$8,038,008, of which the GEF grant coversUS$4,416,529 (54.9%). The ratio of the GEFgrant and total consumption in 1995 isUS$7.87/ODP kg. The Lithuanian GEF projectconsists of seven subprojects: four investmentsubprojects (including one recovery and recy-cling) and one subproject each in institutionalstrengthening, training and demonstration.

8. LITHUANIA

Figure 8: Consumption of Annex A and B Substances and the GEFProject in Lithuania from 1995 to 2002

Note: The appraised phase out of aerosols is based on the GEF subprojects' consumption average of 1993-1995.

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36


Three investment subprojects belong to the re-frigeration sector (including one recovery andrecycling) and one to the aerosol sector.


Lithuania has established an Ozone Focal Pointand a National Ozone Committee. Furthermore,the Lithuanian Refrigeration Association wasestablished. Lithuania introduced an ODS im-port and export licensing system in 1999. Tradein ODS is currently controlled by means of apermit system. Close cooperation between theMinistry of Environment and the customs de-partment allows close tracking of ODS importsand exports. Lithuania is planning to introduceimport quotas and bans on certain products con-taining ODS as well as certain ODS uses.Lithuania has prohibited the use of ODS (ex-cept methyl bromide) in new areas of applica-tion. CFC use in aerosols and for foamproduction as well as in new refrigeration andair-conditioning equipment is banned. To de-velop its legal framework, Lithuania is activelyparticipating in the related regional activitiesof UNEP. It is also planning to take an activepart in anticipated regional training of customsofficers.

Status

Lithuania has submitted all data required un-der Article 7 of the Montreal Protocol, whichshow that the country has been in non-compli-ance with its control obligations since 1996.Consumption of Annex A and B substancesdeclined from 370 ODP tons to 120 ODP tonsbetween 1995 and 1997. This was not least dueto the early adoption of alternative technolo-gies in the GEF subprojects pending implemen-tation of the eventual solution. As a result,consumption in the aerosol and foam sectorscould be phased out in 1997. Lithuania has re-ported consumption of several ODP tons in1996 and 1997 for "other uses," mainly labo-ratory uses not exempted from control underthe Montreal Protocol. Implementation of theinvestment subprojects started in 1998 and maybe completed during the first half of 2000, as

no major problems in implementing the GEFproject are anticipated.

Future benchmarks

MOP 10 accepted the commitment of Lithuaniato reduce the consumption of Annex A and Bsubstances by 86% from 1996 levels by Janu-ary 1, 2000, and to ban the import of CFC 113,carbon tetrachloride and methyl chloroform bythe same date (save for feedstock use and ex-empted essential uses approved by the Parties).Total phase-out was envisaged for January 1,2001 (Decision X/25). Given the current sta-tus, it should be possible to realize this phase-out schedule. Some demand for CFCspersisting beyond 2001, especially for refrig-eration servicing, could be met by stockpilinglimited amounts of CFCs in advance of 2001within the restrictions already established. Thefollowing benchmarks can serve to measureprogress in phasing out ODS and completingthe GEF project, as planned by the Lithuanianauthorities:

January 1, 2000: Ban on imports of carbontetrachloride, methyl chloroform and CFC-113in 2000 for solvent applications except for 1ODP ton of carbon tetrachloride for laboratoryuses and about 10 tons for feedstocks; quotafor CFCs, halons and carbon tetrachloride (forother applications than solvents) in 2000 notto exceed 41.6 ODP tons (save for feedstockuse and exempted essential uses approved bythe Parties).

July 1, 2000: Completion of investment sub-projects of the GEF project.

January 1, 2001: Ban on imports of all An-nex A and B substances in 2001 (except foressential uses or feedstocks).

Lithuania thus plans to import one ODP ton ofcarbon tetrachloride in 2000 for laboratory usesnot exempted from controls under the MontrealProtocol. This is not formally in line with theimport limits set in Decision X/25. In the plan-ning of Lithuania, this is compensated by lowerimports of Annex A substances.

37

Annexes


Poland acceded to the Vienna Convention andthe Montreal Protocol on July 13, 1990, and tothe London and Copenhagen Amendments onOctober 2, 1996.

Country program

The CP was finalized in June 1995. Poland hasproduced carbon tetrachloride mainly for feed-stock use. All other ODS consumed in Polandhave been imported, mainly from the EU andRussia. The CP foresaw completion of thephase-out of Annex A and B substances in linewith the applicable provisions of the MontrealProtocol, i.e., by 1996. The exact break-downof sectoral consumption of Annex A and B sub-stances in 1994 is uncertain. For all sectors,

the CP foresaw total phase-out of consumption(not use) by 1996 (halons: 1994), the phase-out date mandated by the Montreal Protocol.

GEF assistance

The GEF Council adopted the GEF project inApril 1996. CEO endorsement followed inDecember 1996, with the project updated inJanuary 1997. The grant agreement was signedin early 1997 and the World Bank serves as theimplementing agency. The Polish GEF projectwas scheduled to phase out a total of 1,054.0ODP tons (about 50% of total consumption in1994). The GEF grant (US$6,214,000) is pro-viding for 30.8% of the total cost of the projectof US$20,167,000. The ratio of the GEF grantand the average of the total consumption in1994/1995 is US$3.62/ODP kg. The Polish

9. POLAND

Figure 9: Consumption of Annex A and B Substances and the GEFProject in Poland from 1994 to 2000

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planned completion of GEF project(originally) (currently)


38


GEF project consists of nine subprojects, in-cluding seven investment subprojects (of whichone is a recovery and recycling subproject), aninstitutional strengthening and a training sub-project. Of the seven investment projects, twobelong to the refrigeration sector (including onerecovery and recycling), four to the foam sec-tor and one to the aerosol sector. The originalimplementation schedule envisaged GEFproject completion at the end of 1998.


Prior to the completion of the CP, Poland al-ready had, inter alia, introduced a tax on theemission of controlled substances, establisheda CFC import and export licensing system in-cluding quantitative restrictions on imports andstopped the granting of certificates for halon-containing fire-fighting devices. A number offurther initiatives have been taken since thenand are being followed up as part of Poland’sgeneral quest to bring its legislative frameworkin line with EU requirements. The ODS im-port and export licensing system has been de-veloped further to cover all controlledsubstances and include regular feed-back re-porting. Trade in ODS and ODS-containingproducts with Non-Parties to the Montreal Pro-tocol is prohibited. The use of ODS in certainproducts has been prohibited as well as tradein such products. Since 1997 ODS wastes areconsidered hazardous wastes and charges areapplicable for their deposit. A training programfor refrigeration technicians was to start in Sep-tember 1999 as part of a public awareness rais-ing campaign.

Status

Poland has reported the data required underArticle 7 of the Montreal Protocol. Productionof carbon tetrachloride has been reduced tosmall amounts used as process agents and forlaboratory and analytical uses allowed underthe Protocol. Poland stopped halon consump-tion in 1994. According to reported data, Po-land consumed more CFCs than allowed under

the Protocol in 1994 and 1995. It claims thatabout 30% of consumption was for use in me-tered-dose inhalers. Consumption of Annex Aand B substances was phased out by 1996 ex-cept for CFCs for approved essential use asaerosols. Poland also exceeded the limits of theProtocol for Annex B substances in 1996, butwas in full compliance in 1997. Six subprojectshave been completed, while three were ongo-ing in 1999 (including recovery and recycling).Poland continues to take an active part in theregional activities of UNEP to develop furtherits legislative framework and to share its expe-rience in ODS phase-out with its neighbors.Project implementation could have been accel-erated, if Poland had ratified the LondonAmendment earlier. The major remaining prob-lem is related to the timely and effective imple-mentation of the recovery and recyclingsubproject.

Outlook and conclusion

Implementation of the Polish GEF project hasbeen comparatively smooth and timely. Due toconsiderable efforts by Poland itself, Polandhas been able to meet the phase-out date appli-cable to industrialized countries under theMontreal Protocol. While this was achievedbefore implementation of the bigger part of theGEF project started, the GEF project has helpedphase out ODS demand that existed beyond1995 and avoid economic disruptions result-ing from ODS phase-out. Enterprises that didnot complete phase-out by 1996 have gener-ally either met their demand by using existingstocks of Annex A and B substances and transi-tional substances, or have suspended produc-tion. Full completion of the GEF project is nowforeseen for early 2000. Until then, Poland willundertake further efforts to phase out residualCFC demand especially in the refrigerationsector. It is also hoped that progress will beachieved in combating illegal trade (by equip-ping customs officers with CFC identifiers,training activities and improved cooperationwith customs authorities).

39

Annexes

10. RUSSIAN FEDERATION

Figure 10.1: Consumption of Annex A and B Substances and the GEFProject in the Russian Federation from 1992 to 2001

Figure 10.2: Production of Annex A and B Substances in the RussianFederation from 1992 to 2001

GEFProject

Ratification

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

year

OD

P to

ns

A I

B I-III

A II

A + B

projected production

0

10,000

20,000

30,000

40,000

50,000

60,000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

year

OD

P to

ns


A + B

London Amendment


GEF subprojects

start of implementationCEO endorsement1st tranche 2nd 1st tranche 2nd

40



The Russian Federation as the successor of theSoviet Union is a signatory to both the ViennaConvention and the Montreal Protocol and ac-cepted these instruments on June18, 1986, andNovember 10, 1988, respectively. It accededto the London Amendment on January13, 1992,but has not yet ratified the Copenhagen Amend-ment.

Country program

A national action plan for the phase-out of ODSwas prepared in 1994 and adopted by the gov-ernment in May 1995 (Resolution No. 526 ofMay 24, 1995). This set of measures built thebasis of the Russian CP finalized and revisedin October/November 1995.1 Russia producesand exports most kinds of ODS. Russia has thusbeen self-sufficient as regards most Annex Aand B substances. Carbon tetrachloride has attimes been imported (particularly fromUkraine). In 1992 (the base year of the CP),total ODS production amounted to 74,000 ODPtons (roughly 10% of the global total). ODSconsumption in 1992 amounted to roughly49,000 ODP tons. The difference between pro-duction and consumption data (1992: ca.25,000 ODP tons) is accounted for by ODSexports. Russia has been the major supplier ofODS to most other CEITs that still consumecontrolled substances. Discrepancies exist be-tween 1992 production and consumption dataas reported to the Ozone Secretariat and con-tained in the COWI study of August 1994 (theRussian CP). According to the original plans,Russia was to phase out production and con-sumption of Annex A and B substances by theend of 1999.

As one of the major ODS consumers world-wide, Russia has used controlled substances inall major consumption sectors. The COWIstudy/CP puts the sectoral breakdown in 1992

as follows: aerosols: 46%, refrigeration: 27%,foam: 11%, solvents: 2%, and halon: 14%.According to the Russian government's plansof August 1994, the following sectoral phase-out deadlines were envisaged (depending onsmooth implementation of the CP): aerosols:January 1, 1999; refrigeration: January 1, 1998(2000 for servicing); foam: January 1, 1998;solvents: January 1, 1999; and halon: January1, 1997. When Russia presented its phase-outplans to the Implementation Committee of theMontreal Protocol one year later, the lack ofprogress in the interim resulted in a postpone-ment in the sectoral phase-out dates officiallysubmitted by one year for all sectors exceptaerosols (UNEP/OzL.Pro/ImpCom/12/3, An-nex II).

GEF assistance

On the basis of the CP, the World Bank as theimplementing agency in charge of the RussianCP elaborated a GEF project consisting of threetranches to be implemented step by step. TheGEF Council approved the three tranches inMay 1995, April 1996 and May 1999 respec-tively. CEO endorsement of the first twotranches was granted in May 1996 and Janu-ary 1998. Implementation of the first tranchestarted in mid-1996. The Russian ODS Con-sumption Phase-out Project is the biggestproject in terms of volume of ODS and moneyinvolved. It contains 22 subprojects (exclud-ing the Special Initiative on the ProductionSector; see below). Each tranche contains aninstitutional strengthening subcomponent aswell as various investment subprojects (1sttranche: one, 2nd tranche: four, and 3rd tranche:15). In the case of the third tranche, this in-cludes a halon banking management programand a Small Grants Program covering part ofthe small ODS consumers, which were not in-cluded in the GEF grant tranches as separatesubprojects. The GEF project covers all rel-evant consumption sectors. Six subprojects

1 Based on a COWI study of August 1994 The CP has not been available in the context of this study. In thefollowing, the COWI study is thus treated as providing the data of the CP.

41

Annexes

address the aerosol sector, seven the refrigera-tion sector (including three recovery and recy-cling subprojects), three the foam sector andtwo the solvent sector. Implementation of theinvestment subprojects has been assessed tolead to an appraised phase-out of 11,842 ODPtons. The cost of the total GEF project is esti-mated at US$71,967,356, of whichUS$59,964,634 will be provided by a GEFgrant. The ratio of the GEF grant and the aver-age total consumption in 1992-1995 isUS$0.48/ODP kg.

To support and facilitate the close-down ofRussian ODS production, the World Banklaunched a Special Initiative for ODS Produc-tion Closure in the Russian Federation in 1996.The Special Initiative has a total financial vol-ume of US$27 million. Since bilateral commit-ments fell short of the required amount,however, US$8.5 million (includingUS$500,000 to cover foreign exchange con-version adjustments for those donor contribu-tions that were made in their domesticcurrencies) of the third tranche of the GEFproject was reallocated to the Special Initia-tive. In the original planning, the Special Ini-tiative was to lead to a production phase-outby the end of 1999.


By 1992, an Inter-Agency Commission for theProtection of the Ozone Layer already had beencreated. Also, relevant legislation was passedprior to CP implementation. In accordance withthe early planning, a licensing system basedon quotas for ODS production and exports hasbeen established based on government resolu-tions by way of Orders of the State Committeeof the Russian Federation for EnvironmentalProtection. On May 5, 1999, the Russian gov-ernment passed a Decree (No. 490) that deter-mines phase-out of CFC (A I) produc-tion byJuly 1, 2000. Since 1996, it has fixed annualquotas for ODS production and exports. In ad-dition, an import/export licensing system forproducts containing ODS has been established.Russia has also participated in the regional ac-tivities conducted by UNEP. Moreover, re-

search and design work has been initiated tocreate an ozone-safe mixture for CFC substi-tution in existing and new appliances. Eco-nomic instruments providing incentives for themanagement and ultimate elimination of re-sidual ODS demand are under development,which is scheduled to be supported under thethird tranche of the GEF project.

Status

Russia has supplied all data required underArticle 7 of the Montreal Protocol to the OzoneSecretariat. These data indicate that the Rus-sian Federation has been in a state of non-com-pliance with its obligations under the MontrealProtocol since 1996. Since 1992, Russian ODSproduction and consumption have dropped con-siderably. Production dropped by more than80% (1998), including a total phase-out of pro-duction of carbon tetrachloride by 1997 andmethyl chloroform by 1996. Actual productionhas remained below the annual quotas fixedby the Russian government. ODS consumptionwas reduced by more than two thirds by 1997.As of May 1999, agreement had been reachedbetween Russia and the donor countries aboutthe implementation procedure of the SpecialInitiative. The Special Initiative was approvedby the GEF Council in May 1999 as part of thethird tranche that currently awaits implemen-tation.

The transitional dynamics in the Russian Fed-eration have provided a particularly unstableand uncertain framework for the implementa-tion of the GEF project. Delays and variouschanges in the planning have been the result.One subproject of the first tranche is close tocompletion and has phased out CFC use, whilethe subprojects of the second tranche are un-der implementation. Various planned sub-projects have been cancelled or changed inscope and content, while others have beenadded. As a result, the original phase-out sched-ule has been relaxed by six months, i.e., phase-out is now to be achieved by July 1, 2000 (uponcompletion of ODS production plant closuresunder the Special Initiative, as planned by theRussian government). As in other CEITs, the

42


small and medium-sized enterprises and therefrigeration servicing sector present a formida-ble challenge as regards implementing thephase-out of Annex A and B substances. Theconsiderable demand in Russia, particularly forCFCs, that will remain after the scheduledclose-down of production in mid-2000 mayendanger compliance beyond 2000. Much willdepend on the successful implementation of therecovery and recycling subprojects and theSmall Grants Program.

Future benchmarks

MOP 10 determined that production of AnnexA substances should cease June 1, 2000, whilephase-out of consumption of Annex A and Bsubstances should be complete by the same date(Decision X/26). In 1999, consumption of CFC(A I) and halons (A II) should be limited to themaximum production allowed under the CP forthat year: 6,280 ODP tons and 960 ODP tonsrespectively. In contrast, the Russian Federa-tion determined common production quotas for1999 and 2000. Under the assumption that theneed for some stockpiling of CFCs for use be-yond 2000 is accepted, the following bench-marks can serve to measure progress in thephase-out process. The benchmarks take dueaccount of the current planning of the Russiangovernment. Where they diverge from Deci-

sion X/26, this is indicated in italics in squarebrackets:

January 1, 2000: Concrete implementationarrangements for the complete phase-out ofproduction and consumption of Annex A andB substances by July 1, 2000, in place; imple-mentation of third tranche operational; addi-tional production of CFCs in 1999/2000 onlyfor stockpiling and quota not to exceed 10,150ODP tons (A I: 10,120; B I: 30).

July 1, 2000: Ban on imports and exports ofODS effective; phase-out of consumption andproduction of Annex A and B substances [De-cision X/26: June 1, 2000]; completion of Spe-cial Initiative.

January 1, 2001: Implementation of secondtranche of GEF project completed.

January 1, 2002: Completion of GEF projectexcept for Small Grants Program, halon bank-ing management program and technical assis-tance.

January 1, 2004: Full completion of GEFproject (the Special Initiative will only closeby the end of 2006 in order to allow forcontinued monitoring and verification of plantclosures).

43

Annexes


Slovakia became a Party to the Vienna Con-vention and the Montreal Protocol on May 28,1993, as a successor state of Czechoslovakia.It approved the London Amendment onApril 15, 1994, and acceded to the CopenhagenAmendment on January 9, 1998.

Country program

The CP was finalized in August 1992. Slovakiahas neither produced nor exported ODS (ex-cept for some re-exports of HCFCs in the1990s). In 1991, the base year of the Czecho-slovakian CP, consumption of the former CSFRequalled 3,730 ODP tons. About 80% of 1991consumption consisted of CFCs (A I) and 18%

was carbon tetrachloride (B II). The data re-ported by Slovakia showed total consumptionof Annex A and B substances of 920 ODP tonsin 1992, of which nearly two-thirds were CFCsand 30% carbon tetrachloride. In 1991,Slovakia's refrigeration and aerosol sectorsaccounted for 50% and 30% respectively of to-tal CFC consumption, the foam for 15%. TheCzechoslovakian CP foresaw completion of theODS phase-out by the end of 1996.

GEF assistance

The GEF Council approved the Slovakian GEFproject in May 1995 and CEO endorsement wasgiven in December 1995. The World Bank isthe implementing agency with the InternationalFinance Corporation (IFC) administering the

11. SLOVAKIA

Figure 11: Consumption of Annex A and B Substances and the GEFProject in Slovakia from 1991 to 1999

GEFProject

Ratification

0

200

400

600

800

1,000

1,200

1,400

1991 1992 1993 1994 1995 1996 1997 1998 1999

year

OD

P to

ns

A + B

GEF subprojects

London AmendmentMontreal Protocol

CEO endorsement

Copenhagen Amendment




44


GEF project. The IFC management approvedthe GEF project in June 1996 and implementa-tion started in September 1996. The SlovakianGEF project was expected to phase out 283.0ODP tons (30% of total consumption in 1992)at a total cost of US$5,953,000, of whichUS$3,500,000 (58.8%) was to be covered by aGEF grant. The ratio of the GEF grant and av-erage consumption of Annex A and B sub-stances in 1991-1993 is US$ 3.44/ODP kg. Thebasis of calculating the appraised phase-out wasproduction/production capacity. It is subject toreview in line with the established guidelinesfor calculating appraised phase-out. Figures arelikely to be revised downwards. The SlovakianGEF project consisted of two investment sub-projects in the refrigeration sector. The fullproject was originally scheduled to be com-pleted in mid-1998.


Slovakia has operated an import and export li-censing system including import quotas since1995. From April 1, 1998, production, import,export and use of Annex A and B substances aswell as HBFCs have been prohibited by law.This law introduced charges for production andimport of ODS as well as for some products.The same law forbids production, import andplacing on the market of products containingHCFCs starting January 1, 2015. Import of allCFCs has been effectively banned since 1996in accordance with the Montreal Protocol.Slovakia does currently not plan to introducenew regulations on ODS, but takes an activepart in the regional activities organized byUNEP in Central and Eastern Europe.

Status

Slovakia has submitted all data required underArticle 7 of the Montreal Protocol until 1997.The data show full compliance of Slovakia with

its control obligations under the Montreal Pro-tocol. In 1994 the use of CFC in aerosols wasphased out. According to the official data re-ported under Article 7, Slovakia also achieveda phase-out of halons in 1994 and ceased allimports of Annex A and B substances by 1996.The bigger subproject was completed prior toimplementation of the GEF project in 1995.Both subprojects ceased using CFCs in 1995.Prior to the ban of imports, large amounts werereportedly stockpiled at the end of 1995. TheSlovakian GEF project took a considerable timeto become fully operational due to the dissolu-tion of Czechoslovakia in 1992. The comple-tion of the overall project was delayed becausethe anticipated privatization of the companieswas cancelled by the Slovak government.Therefore IFC suspended all disbursementsfrom mid-1997 until the completed reorgani-zation. Apparently, illegal imports have playeda role (as in most other European countries)but cannot be quantified.


When the Slovakian GEF project is completedat the end of 1999, GEF support will have en-abled the recipients to stay in the market andcompete in the Czech and Western Europeanmarkets. It also helped reduce demand for ODS,which otherwise— even in face of governmentregulation— might have led to increased incen-tives for illegal imports. Still, residual demandfor Annex A and B substances, generally CFC-12 refrigerant, has persisted in Slovakia. Thismay amount to 80-100 tons and would be metby recovery and reclamation of CFC-12, drop-in substitutes (where available) and full retro-fit of systems to non-ODS, and illegal imports.Overall, Slovakia appears to have completedits phase-out of Annex A and B substances suc-cessfully— and the GEF project has made a sig-nificant contribution to this end.

45

Annexes


Slovenia joined the Vienna Convention and theMontreal Protocol on July 6, 1992, andaccepted the London Amendment on Decem-ber 8, 1992. On November 13, 1998, it alsoaccepted the Copenhagen Amendment.

Country program

The CP was finalized in June 1994 and adoptedby the Slovenian government in July 1994.Slovenia has neither produced nor exportedODS (except for minor re-exports), but has metits demand by imports mainly from the Euro-pean Union. In 1992 (the base year of the CP),total ODS consumption was close to 1,210 ODPtons. About 90% of 1992 consumption con-sisted of CFCs (A I). Aerosols and foams ac-counted for more than 35% each. The CPrecommended passing regulation to phase out

CFC use by the end of 1995, except for servic-ing of existing refrigeration equipment thatwould be allowed until the end of 2001. Theuse of methyl chloroform was to be bannedfrom January 1, 1998, and the use of halons in1994. This appeared to be in line with theMontreal Protocol since Slovenia was classi-fied as an Article 5 country at the time of CPpreparation.

GEF assistance

The GEF Council approved the GEF projectin May 1995 and CEO endorsement was givenin September 1995. Implementation started atthe end of 1995. At this time, Slovenia was clas-sified as not operating under Article 5 and thusadapted its phase-out schedule so as to complywith the requirements applicable to industrial-ized countries under the Montreal Protocol (i.e.,full phase-out of all Annex A and B substances

12. SLOVENIA

Figure 12: Consumption of Annex A and B Substances and the GEFProject in Slovenia from 1992 to 1998

GEFProject

Ratification

0

200

400

600

800

1,000

1,200

1,400

1992 1993 1994 1995 1996 1997 1998

OD

P to

ns

Aerosols

Refrigeration

Foams

Solvents

Copenhagen AmendmentMontreal Protocol,

London Amendment

CEO endorsement



GEFsubprojects


46


by the end of 1995). The World Bank assistedSlovenia in the CP implementation as theimplementing agency. The Slovenian GEFproject was to phase out 338.2 ODP tons intotal (about one-third of total 1992 consump-tion). The GEF grant (US$5,884,000) providedfor 66.6% of the total cost of the project(US$8,835,000). The ratio of the GEF grantand total consumption in 1992 was US$4.88/ODP kg. The GEF project consisted of sevensubprojects including six investment sub-projects and one institutional strengtheningsubproject. Of the six investment subprojects,three were in the refrigeration and foam sec-tors, two in the aerosol sector and one in thesolvent sector.


A national ozone office was established work-ing closely with governmental and non-govern-mental organizations. Specific ODS legislationwas passed in December 1997 controlling pro-duction, imports, exports and use of ODS andODS containing products. The import of ODSexcept HCFCs and methyl bromide was pro-hibited. Exemptions were also possible for es-sential uses, recovered and reclaimedrefrigerants, for use as feedstock and for de-struction. A licensing system for imports andexports of ODS was established and the plac-ing on the market of products containing ODS(except HCFCs) banned. Slovenia is currentlypreparing legislation covering the use/disposalof ODS-containing products/equipment. Amanual on good practices in refrigeration andair conditioning was prepared, and 11 trainingcourses for service technicians in this sectorand a workshop for customs officers were con-ducted. Slovenia also participated in regionalworkshops on ODS phase-out launched by theWorld Bank.

Status

Slovenia has supplied all data required underArticle 7 of the Montreal Protocol to the Ozone

Secretariat. The Slovenian GEF project wascompleted in June 1998 and has led to totalphase-out of ODS. Overall, Slovenia virtuallyphased out the consumption of Annex A and Bsubstances by 1996. Residual imports of CFCsin 1996 and 1997 (and 1998) were mainly forlaboratory uses and for meeting residual de-mand in the refrigeration sector. However, thelatter did not constitute non-compliance asSlovenia was classified as an Article 5 countryafter 1995. Financial viability problems and re-planning of subproject components led to de-lays in the implementation phase. Problemshave also been faced with respect to enforce-ment and illegal imports of ODS that are sus-pected to occur (but no hard evidence exists).


Implementation of the Slovenian GEF projecthas been relatively smooth and successful.When Slovenia was reclassified as a Party op-erating under Article 5 of the Montreal Proto-col based on its 1995 consumption data, projectimplementation had already been initiated.Thus, Slovenia became the only Article 5 coun-try receiving GEF assistance. Several of theprojects introduced innovative solutions forODS phase out to the Slovenian market. Thenational ozone office has been instrumental inrealizing ODS phase-out beyond the investmentsubprojects funded under the GEF project.Overall, the project has also benefitedSlovenia's preparations for joining the EU inthe early 21st century. The investment projectsthus contributed to reducing demand for ODS,which might otherwise have been met by ille-gal imports. However, the issue of continuingdemand for CFCs for servicing existing equip-ment, a major driving force of illegal imports,still needs to be addressed adequately. Sloveniawishes to implement a recovery and recyclingproject taking due account of the relevant ex-perience made in other CEITs in that respect.

47

Annexes


Turkmenistan ratified the Vienna Conventionand the Montreal Protocol on November 18,1993, and the London Amendment on March15, 1994. It has yet to ratify the CopenhagenAmendment.

Country program

With the assistance of UNDP and UNEP, theCP was finalized and approved by the govern-ment in July 1998. Turkmenistan does not pro-duce or export ODS. In 1996 (the base year ofthe CP), consumption of ODS was 31.1 ODPtons. Ninety-five percent of the total was CFCs(A I). As regards other ODS, only consump-tion of HCFCs was reported. All ODS con-

sumption in Turkmenistan in 1996 was due toservicing of refrigeration equipment. Importsoriginated mainly from the Russian Federation.Under the CP, the phase-out of CFCs wasplanned to be completed by (the end of) 2002,with some limited remaining demand for ser-vicing to be met by recovered and recycledmaterial.

GEF assistance

The GEF Council approved the TurkmenistanGEF umbrella project in October 1998. CEOendorsement was not required since theTurkmenistan GEF project is a PDF B project.The UNDP grant agreement was signed in Feb-ruary 1999. UNDP and UNEP serve as imple-menting agencies. The Turkmenistan GEF

13. TURKMENISTAN

Figure 13: Consumption of Annex A and B Substances and the GEFProject in Turkmenistan from 1996 to 2003

Note: CEO endorsement was not required since the Turkmenistan GEF project is a PDF B project.

GEFProject

Ratification

0

5

10

15

20

25

30

35

1996 1997 1998 1999 2000 2001 2002 2003

year

OD

P to

ns

GEF subprojects

A + B


GEF approval

London Amendment (1994)





48


project should lead to a phase-out of 14.06 ODPtons of annual ODS consumption (nearly halfof 1996 consumption). Of the project's cost ofUS$383,920, 94.0% (US$361,120) will be cov-ered by a GEF grant. The ratio of the GEF grantand total consumption in 1996 is US$12.20/ODP kg. The GEF project consists of threesubprojects, one each on recovery and recy-cling, institutional strengthening and capacitybuilding and training. The schedule of the CPenvisions the completion of these subprojectsby the end of 2001 (training and investment:2000).


The CP foresees, inter alia, the establishmentof a National Ozone Unit within the Environ-ment Ministry. Furthermore, an import licens-ing system and a ban on the import ofODS-using equipment (supported by labellingrequirements) is planned to be completed byJanuary 2000. Within the same period, a moni-toring system for ODS imports in the customsdepartment, a system of disincentives/incen-tives (e.g., taxation of ODS, fees for permitsfor imports and exports of ODS and relatedproducts) and a licensing/certification systemfor refrigeration servicing technicians wasplanned to be elaborated and established.Turkmenistan has participated in UNEP's re-gional activities for developing the regulatoryframework in CEITs. In the framework of theGEF project, it intends to develop and presentto parliament a separate Law on Ozone LayerProtection.

Status

Turkmenistan has submitted all data requiredunder Article 7 of the Montreal Protocol to theOzone Secretariat for 1996. It has yet to reporton the baseline years of control (1986 and 1989,as appropriate) and for the years 1994, 1995and 1997 (as of September 1999). Turkmeni-stan was in non-compliance in 1996 with re-spect to CFC consumption. Judging fromavailable preliminary data, the consumption of

CFCs in 1997 and 1998 was roughly at the samelevel as in 1996. The projects to be imple-mented with GEF support appear to be well ontrack. Uncertainty exists with regard to the cur-rent state of development of the legal frame-work in Turkmenistan. Lack of awareness andtraining of the enterprises is cited as an impedi-ment to a fast phase-out. Compliance with theODS phase-out by 2003 will require particularefforts on the side of the government to con-trol imports of CFCs.

Future Benchmarks

The Implementation Committee and the MOPof the Montreal Protocol have not yet dealt withTurkmenistan in detail. The following bench-marks could serve to measure progress in thephase-out process until 2003 and have largelybeen submitted by the national ozone office.Proposed additions are indicated in squarebrackets:

1999: Import of CFCs should not exceed 22ODP tons.

January 1, 2000: Import/export licensing sys-tem in place; bans on import of equipment us-ing and containing ODS; import quota for CFCsin 2000 not exceeding 15 ODP tons (roughly–50% compared to 1996) [ban of import of allAnnex A and B substances except CFCs (A I)].

January 1, 2001: Import quota for CFCs in2001 not exceeding 10 ODP tons (–66% com-pared to 1996); effective system for monitor-ing and controlling ODS trade in place andworking.

[July 1, 2001: recovery and recycling andtraining projects completed.]

January 1, 2002: Import quota for CFCs in2002 not to exceed 6 ODP tons (–80% com-pared to 1996).

January 1, 2003: Total prohibition of importsof Annex A and B substances/zero quota; GEFproject completed.

49

Annexes


Ukraine ratified the Vienna Convention on June18, 1986, and the Montreal Protocol on Sep-tember 20, 1988. It acceded to the LondonAmendment on February 6, 1997, and has yetto ratify the Copenhagen Amendment.

Country program

The Ukraine CP was completed in October1995 and received government approval inOctober 1996. Ukraine has been a producer andexporter of carbon tetrachloride (to Russia foruse as feedstock) and methyl bromide. All ofits carbon tetrachloride production has usuallybeen exported. For other ODS, Ukraine hasbeen dependent on ODS imports, in particu-

lar from Russia. In 1994, Ukraine consumedclose to 2,500 ODP tons, of which nearly allwas CFCs. The refrigeration, aerosol and sol-vent sectors accounted for all consumption ofAnnex A and B substances in Ukraine in 1994.The refrigeration sector had a dominant posi-tion making up more than 60% of the total.Assuming that financial assistance would begranted in 1995, the CP foresaw completion ofODS phase-out by the end of 1997. An updatedschedule may be part of the updated CP cur-rently prepared.

GEF assistance

The GEF Council approved the GEF projectin October 1996 and CEO endorsement wasgiven in February 1998. The grant agreement

14. UKRAINE

Figure 14: Consumption of Annex A and B Substances and the GEFProject in Ukraine from 1994 to 2002

GEFProject

Ratification

500

1,000

1,500

2,000

2,500

3,000

1994 1995 1996 1997 1998 1999 2000 2001 2002

year

OD

P to

ns


GEF subprojects

A + B

London AmendmentMontreal Protocol (1988)

planned completionof GEF project



CEO endorsement

50


was signed in September 1998 and ratified bythe Parliament of Ukraine on March 4, 1999.The implementing agency for the Ukraine GEFproject is the World Bank. The GEF projectconsists of 12 subprojects, including nine in-vestment subprojects and three subprojects oninstitutional strengthening, training in the halonsector and product development. The currentGEF project has an appraised ODS phase-outof 1,300 ODP tons. The ratio of the GEF grantand total average Annex A and B consumptionin 1994-1996 is US$14.80/ODP kg. Upon en-dorsement of the GEF project in 1998, phase-out was scheduled for the end of 1999.


Ukraine established an Interagency Commis-sion on Implementation of the Montreal Proto-col in late 1995 and a national ozone office inlate 1996. It introduced an import and exportlicensing system for ODS in 1998. ODS con-taining products are also subject to import andexport licensing, and Ukraine has banned ODSre-exports. Licensing of the handling of ODSbecame effective in 1999. Sector specific bansand licensing requirements for refrigerationtechnicians are foreseen. It also plans to im-pose duties on ODS imports. Ukraine has takenan active part in the regional activities of UNEP.

Status

Ukraine has supplied all data required underArticle 7 of the Montreal Protocol to the OzoneSecretariat until 1997. Thus, it was in non-com-pliance with its control obligations in 1996 and1997. Ukraine reduced its consumption of An-nex A and B substances by more than 40% be-tween 1994 and 1997. There has been aconsiderable delay in the implementation of theCP and the GEF project. Grant agreement ef-fectiveness was delayed for several monthsbecause of political turf battles between thegovernment and the parliament in Ukraine in

late 1998 and early 1999. Because of the con-tinuing unstable political and economic situa-tion, several of the smaller subprojects inparticular may face financial viability prob-lems. CFC demand by businesses dependenton CFC servicing is likely to persist beyondofficial phase-out. To ease the pressure,Ukraine could build up a small, closely moni-tored CFC stock before 2002. Establishing suchstocks is likely to require government action.In addition, it appears essential that Ukraine,on the basis of the recovery and recycling sub-project, builds up capacity for recovering andrecycling CFCs so as to meet the "servicingtale" in the refrigeration sector. If no furtherproblems occur, project completion might beachieved in 2001.

Future benchmarks

Ukraine committed to achieve total phase-outby January 1, 2002, vis-à-vis MOP 10 (Deci-sion X/27) in 1998. The Ukraine ozone officewas not in a position to elaborate maximumimport requirements until ODS phase-out, asestablishing quotas belongs to the competenceof the Interagency Commission on Implemen-tation of the Montreal Protocol. Despite thislimitation, the following proposals of bench-marks for measuring progress in the phase-outprocess until 2002 are put forward. Ukrainemay wish to consider establishing these or simi-lar commitments officially:

January 1, 2000: All GEF subprojects ongo-ing; import of Annex A (CFCs only) and B sub-stances in 2000 not to exceed 700 ODP tons.

January 1, 2001: Import quota for CFCs in2001 not exceeding 400 ODP tons; ban of im-port of Annex B substances; full phase-out inaerosols, foams and solvents sectors realized(and related subprojects completed).

January 1, 2002: All investment subprojectscompleted; zero import quota for Annex A andB substances.

51

Annexes


The Republic of Uzbekistan acceded to theVienna Convention and the Montreal Protocolon May 18, 1993, and to the London andCopenhagen Amendments on June 10, 1998.

Country program

The CP, prepared with assistance of UNEP andUNDP, was submitted for approval of the GEFCouncil in August 1998 (and subsequently ap-proved). The final draft CP was pre-sented for Uzbekistan governmentapproval in March 1999.Uzbekistan does not produce orexport ODS (some re-exports ofCFCs occasionally occurred in thepast). Almost all ODS are importedfrom Russia. ODS consumptionamounted to 274.5 ODP tons in

1996, the base year of the CP. More than 95%of the total consumption of Annex A and B sub-stances was CFCs (A I). All CFCs (and HCFCs)imported are consumed in refrigeration, car-bon tetrachloride and methyl chloroform as sol-vents for laboratory use. The CP foresees a totalphase-out by January 1, 2002, and contains de-tailed annual phase-out steps. As determinedby the tenth MOP of the Montreal Protocol inNovember 1998 (Decision X/28), the follow-ing phase-out schedule is being pursued.

15. UZBEKISTAN

Figure 15: Consumption of Annex A and B Substances and the GEFProject in Uzbekistan from 1996 to 2002

GEFProject

Ratification

0

50

100

150

200

250

300

1996 1997 1998 1999 2000 2001 2002

year

OD

P to

ns

GEFsubprojects


A + B

London Amendment,Copenhagen AmendmentMontreal Protocol (1993)

CEO endorsement


2000 2001 2002

CFCs -40% -80%- -100%

Carbon Tetrachloride -35% -67% -100%

Methyl Chloroform -40% -82% -100%

TOTAL -40% -79% -100%

52


GEF assistance

The Uzbekistan GEF project was adopted bythe GEF Council in October 1998, and CEOendorsement followed in January 1999. Thegrant agreement was signed in March 1999.UNDP and UNEP act as implementing agen-cies. The GEF project consists of four sub-projects, including one each on institutionalstrengthening, training, recovery and recyclingand technology conversion. The appraised ODSphase-out of the subprojects is 142 ODP tons(52% of total ODS consumption in 1996). Theratio of the GEF grant and total consumptionin 1996 is US$11.77/ODP kg. The recovery andrecycling scheme is to contribute nearly two-thirds to the appraised ODS phase-out of theGEF project. Subprojects were originallyplanned to be completed by the end of 2000(institutional strengthening: 2001).


Framework legislation for the protection of theozone layer has existed since 1996. A draft reso-lution envisages, among other things: the es-tablishment of an inter-ministerial commission;a ban on imports of halons (except for essen-tial use), other fully halogenated CFCs (B I)and refrigeration and air conditioning equip-ment containing Annex A and B substances;the establishment of import quotas for CFCs(A I), carbon tetrachloride and methyl chloro-form; the introduction of an import/export li-censing system for ODS and productscontaining them; the organization of a publicawareness raising campaign; and the formula-tion of economic mechanisms (tax privileges,regulation of prices, etc.). It was expected thatthe draft resolution would be approved in au-tumn 1999. In developing its policies,Uzbekistan has benefited from UNEP's regionalactivities.

Status

Uzbekistan has supplied all data required un-der Article 7 of the Montreal Protocol to theOzone Secretariat until 1997. These show non-compliance since 1996. The implementation ofthe CP is still at an early stage. It is expectedthat the training, recovery and recycling andtechnology conversion subprojects will be com-pleted by mid-2001 (institutional strengthen-ing 2002). Compliance with the ODS phase-outschedule will require a strenuous enforcementeffort to control imports of CFCs. The phase-out schedule presented above should allow tostockpile some CFCs for use after 2001 to fa-cilitate transition in the refrigeration servicingsector.

Future benchmarks

In line with the Decision X/28 of MOP 10, thefollowing benchmarks can serve to measureprogress in the phase-out process until 2002,as planned by the Uzbekistan authorities:

September 1999: Import/export licensing sys-tem in place; bans on import of halons (A II)and other fully halogenated CFCs (B I) andrefrigeration and air conditioning equipmentusing or containing Annex A and B substances;import quota for remaining Annex A and B sub-stances not exceeding 225 ODP tons in 1999and 164 ODP tons in 2000.

July 1, 2001: Recovery and recycling, train-ing and SINO subprojects completed; importquota for A and B substances in 2001 not ex-ceeding 56 ODP tons.

January 1, 2002: No import quota for AnnexA and B substances/ban of import effective;effective system for monitoring and control-ling ODS trade in place and working.

tudy of impacts of gef activities on phase-out of ozone depleting substances

Documents

ods phaseout

b substances

ceits from19861989

consumption of annex

future gef activities

e substances

representthe views

figure b