Montreal protocol on substances that deplete the ozone layer report of the technology and economic assesment panel volume 4: decision XXXI/7 - continued provision of information on energy-efficient and low-global-warming-potential technologies.

EXECUTIVE SUMMARY

1. The Montreal Protocol has proved to be effective for the protection of the ozone layer, and at the same time has made a substantial contribution to avoiding emissions of powerful greenhouse gases, complementing the global efforts of the UN Framework Convention on Climate Change (UNFCCC).

2. The Parties to the Montreal Protocol have an opportunity through the Kigali Amendment to further contribute to significant mitigation of climate impacts by improving energy efficiency of refrigeration and air conditioning and heat pump (RACHP) equipment during the phase-down of high GWP refrigerants.

3. In the context of the Climate Emergency, demand for cooling is increasing rapidly. If unmanaged, this will result in a cycle of increasing global warming through greater emissions from fossil-fuelled energy consumption combined with the emissions of high GWP refrigerants.

4. This year, both the MOP of the Montreal Protocol and the COP of UNFCCC will discuss matters related to the cooling sector. Cooling underpins all five themes chosen for UNFCCC COP-26. One COP-26 initiative aims to double efficiency standards in four product categories including room air conditioners and refrigerators. It specifically cites the Montreal Protocol in the context of opportunities to work collaboratively with the broader climate and energy communities and leveraging the Protocol’s years of experience working with the cooling sector. As efficient cooling gains traction at COP26, there is likely to be substantial “pull through” to benefit from the synergies with HFC phase-down under the Montreal Protocol.

5. Reports from TEAP, UNEP, International Energy Agency (IEA), Kigali Cooling Efficiency Program (K-CEP), Climate and Clean Air Coalition (CCAC) and other institutions all emphasise the opportunity to mitigate global warming from a coordinated transition to lower GWP HFC and higher efficiency cooling. Recent initiatives such as the Cool Coalition, the twinning programme for senior energy and environment officials from A5 parties, and government leadership on developing national cooling plans, all support this initiative.

6. The TEAP Energy Efficiency Task Force (EETF) continues to identify technical improvements to increase equipment energy efficiency (EE) and cost such as sensors, controls, variable speed drives and condenser precooling.

7. In general, new equipment using lower GWP alternatives has higher efficiency than the equipment it replaces.

8. The Global Cooling Prize awarded in April 2021, showed that it is technically and economically feasible with innovative design in room air conditioners to potentially achieve five times lower climate impact with a cost that is close to twice that of the baseline technology when manufactured at scale. The winners have developed units using higher performance components and lower or ultra-low GWP refrigerants. May 2021 TEAP Report, Decision XXXI/7: Continued provision of information on energy-efficient and low-global-warming-potential technologies 2

9. The EETF has confirmed it is possible to jump from HCFCs directly to lower GWP options in many sectors in different regions whilst maintaining/enhancing energy efficiency.

10. The coordination of energy efficiency with the implementation of HCFC phase out and HFC phase-down enables industry to explore the synergies related to redesigning equipment and retooling manufacturing lines, in which the MLF and the implementing agencies have great experience. A good example is the adoption of a national cooling plan and revised energy efficiency standards for room AC in China which has coincided with an over 30% decrease in the weighted-GWP of domestic sales between 2015 and 2020 as manufacturers recognize the benefits of redesigning their products for both energy efficiency and refrigerant transition (Case study 1.3). The in-depth knowledge of RACHP technologies held within the “Montreal Protocol family” can strongly enable this combined reduction of direct and indirect GHG emissions.

11. Availability (as defined in Section 3.2): Technology and refrigerants are now widely available to replace most high GWP HFCs, with both natural and lower GWP fluorinated refrigerants options covering key market sectors. This is supported by the numerous best practice case studies presented in this report.

12. Accessibility (as defined in Section 3.2): Access to high EE / lower GWP products is improving, although it remains limited in many A5 parties and even in some non-A5 parties.

13. Improved availability and accessibility to high EE/lower GWP products in A5 parties could be achieved sooner by: a. faster ratification of the Kigali Amendment, b. progress in operationalising the Kigali Amendment, c. enabling individual Parties for fast action, d. supporting policies designed to improve accessibility, e.g., tackling market barriers affecting the end consumer, e. adopting ambitious and progressive energy performance standards across regions that are appropriately harmonized and coordinated with HFC phasedown strategies (e.g., U4E model regulations), f. coordinating multi-agency funding for A5 enterprise conversions for both high EE and lower GWP refrigerants.

14. A5 parties creating a large installed base of low EE equipment, will be economically disadvantaged, as valuable electricity capacity is lost from other uses and because of the need to build more generating capacity. The economic disadvantage could last for decades due to the long product lifetimes of cooling equipment. Support for the development and enforcement of policies and regulations to avoid the market penetration of low efficiency RACHP equipment could stop environmentally harmful dumping and limit these economic impacts. May 2021 TEAP Report, Decision XXXI/7: Continued provision of information on energy-efficient and low-global-warming-potential technologies 3

15. Individual parties could consider adopting a fast mover status, with ambitious synergistic regulation for the HCFC phase out and HFC phase-down with progressive EE improvement.

16. One facet of governmental cooperation that has proven absolutely essential is the coordination between senior energy efficiency officials and ozone officers. This expedites the further transition to lower GWP and higher EE equipment by the coordinated adoption of refrigerant policies with broad energy efficiency policies including the revision of minimum energy performance standards (MEPS) and labels. In contrast, the implementation of ambitious MEPS alone can undermine the HFC phase-down by encouraging improved EE of cooling equipment, but with the use of high GWP refrigerants, especially in countries that are primarily equipment receivers.

17. Integrated modelling of the direct (refrigerant-related) GHG emissions and indirect (energy-related) GHG emissions from refrigeration, air-conditioning and heat pump (RACHP) markets provides valuable insights into the importance of linking improvements in energy efficiency with the HFC phase-down. A number of modelling tools are available and in development. Early outputs from the “HFC + Energy Outlook Model” suggest: a. indirect energy-related GHG emissions represent around 70% of total GHG emissions from the RACHP sector, b. there are substantial benefits from earlier action to prevent the increase in high GWP HFC use in reducing the total cumulative emissions, c. combining faster phase-down of high GWP HFCs and improving efficiency provides substantial additional benefits in reducing the total cumulative emissions, d. there is a large potential to reduce both direct (>90%) and indirect emissions (>98%) by 2050, compared to a business-as-usual scenario, e. how to identify the measures that yield the greatest benefits through addressing both the refrigerant-related and the energy-related GHG emissions, f. transitioning to the use of heat pumps is important in terms of the abatement of fossil fuel emissions from heating.

18. Individual Parties could be encouraged to utilise outputs from such modelling as part of their HFC phase-down planning process.

19. Parties may wish to consider asking TEAP to develop a detailed regional and world model to further assess the integration of energy efficiency and HFC phase-down measures.

20. This report builds on the 2018 report in response to Decision XXIX/10 and subsequent EETF reports in response to Decision XXX/5 and Decision XXXI/7. The TEAP EETF has compiled information on relevant funding agencies, technology options, costs, availability, accessibility, and best practices for maintaining and/or enhancing energy May 2021 TEAP Report, Decision XXXI/7: Continued provision of information on energy-efficient and low-global-warming-potential technologies 4 efficiency in refrigeration, air-conditioning and heat pump (RACHP) sectors while phasing down HFCs under the Kigali Amendment.

21. As part of this update and to assist parties with future planning, the EETF has proposed a draft framework to catalogue the diverse and extensive information that has been compiled in these reports and to assist Parties’ understanding. This framework considers options related to capacity-building, servicing sector, manufacturing and notin-kind alternatives.

22. Parties may wish to consider asking TEAP to further develop the draft framework to assist the Parties as they move forward to operationalise the Kigali Amendment.

23. An overarching conclusion of the EETF is that during the last five years, technology has developed rapidly. There is now availability of high EE/lower-GWP equipment for most market sectors. These technologies are increasingly accessible worldwide. Market examples suggest that it is possible in the right regulatory and financial environment to consider an accelerated timeline for the Kigali Amendment and the integration of energy efficiency.