China Just Entered a Major International Climate Agreement. Now Comes the Hard Part

Under the Kigali Amendment, Chinese chemical companies must stop emitting a super-pollutant called HFC-23. The challenges are enormous.
By Phil McKenna, Lili Pike, September 22, 2021

China began enforcing the Kigali Amendment to the Montreal Protocol last week—and the climate implications are huge.

The agreement requires China and other signatory nations to slash the production and use of powerful greenhouse gases known as hydrofluorocarbons (HFCs) over the coming decades, and to immediately stop emitting the most potent, HFC-23, a greenhouse gas that is 14,600 times more powerful than carbon dioxide in warming the atmosphere.

HFC-23 is an unwanted byproduct of the production of hydrochlorofluorocarbon-22 (HCFC-22), a chemical used as a refrigerant and a component in Teflon and other products.

Unlike carbon dioxide, which cannot be easily broken down, HFC-23 can be destroyed at relatively little cost through incineration, offering a rare opportunity to quickly address climate change at a fraction of the cost of other methods aimed at reducing carbon dioxide emissions.

But an estimated 15,900 tons of HFC-23 are still being released into the atmosphere each year, equal to the annual greenhouse gas emissions of 50 million automobiles. Eliminating emissions of HFC-23 and other HFCs could prevent half a degree of additional warming by the end of the century.

Now comes the hard part for China, given its current rank as the world’s largest HFC-23 producer.

The task of reducing emissions will be complicated by the fact that some Chinese chemical companies may have failed to comply with the country’s previous requirements for incinerating HFC-23, and by the country’s rapidly growing sector of new HCFC-22 producers, according to a review by Inside Climate News of United Nations documents, Chinese government reports and company records.

Experts in China and the United States also cited ambiguity in the Kigali Amendment itself and said in interviews that, even under the best circumstances, monitoring the plants in China’s sprawling chemical industry that produce HCFC-22 and its byproduct, HFC-23, will be difficult.

The Montreal Protocol was negotiated in 1987 to address the ozone hole over Antarctica by phasing out the production of ozone depleting chemicals. The Kigali Amendment was added to the Protocol in 2016 to phase down the production and use of HFCs, to help address climate change.

“You could have very good regulations, you could be part of the Kigali amendment, you could be doing everything you think as a government you can possibly do, but your efforts are going to be on paper only if there isn’t a robust monitoring, reporting, verification and enforcement program that goes along with it,” said Avipsa Mahapatra, climate campaign lead with the Environmental Investigation Agency, a nonprofit environmental organization based in Washington.

Monitoring Challenges

A study published last year in the journal Nature Communications found that global HFC-23 emissions were higher than ever in 2018, the most recent year for which data is available.

Kieran Stanley, a climate scientist at the University of Bristol, and his co-authors couldn’t say definitively where the emissions were coming from. They suggested that China was the most likely source, but a June report by the United Nations Environment Program challenged that assertion.

A global monitoring network, administered by the U.S. National Oceanic and Atmospheric Administration, and another international effort known as the Advanced Global Atmospheric Gases Experiment, detect emissions of HFC-23 and other potent greenhouse gases or ozone depleting substances controlled under the Montreal Protocol. However, these monitoring networks can’t detect regional emissions from vast swaths of the planet, including much of China.

A new atmospheric study that builds on the work of the 2020 Nature Communications research is now in the works, focusing on regional emissions from East Asia, although its findings may be limited by the challenges in monitoring.

“There are major gaps in monitoring capability and data availability, throughout much of the world,” said Alex Hillbrand, an HFC specialist with the Natural Resources Defense Council in Washington.  “It is concerning to me that we’re heading into a period of time with an HFC phase down and immediate HFC-23 destruction requirements in which we’re quite limited in what we can do atmospherically to make sure that all the reports are up to snuff.”

How a UN Program Became a ‘Perverse Incentive’

The United Nations first targeted HFC-23 emissions in China in 2006, when a UN program known as the Clean Development Mechanism or CDM, began providing incentives to HCFC-22 producers to destroy their HFC-23 emissions. The program paid HCFC-22 producers in China and other developing countries emission reduction credits, which were then traded with developed countries to meet their emission reduction targets under the Kyoto Protocol.

The program’s incentives for reducing HFC-23 emissions were so lucrative, they created a “perverse incentive.” Producers, the vast majority of them in China, began producing excess HCFC-22, and its byproduct, HFC-23, and doing so as inefficiently as possible, simply so they could then destroy more HFC-23 to earn additional emission reduction credits.

“These companies made billions of dollars in windfall profit from the sale of carbon credits,” Mahapatra said. “Their main business became generating HFC-23 so they could destroy it, as opposed to their actual other production.”

Limitations in the Global HFC-23 Monitoring Network

In response, the European Union, the largest purchaser of CDM credits, stopped funding the program in 2013, causing the price of emission reduction credits to plummet.

Global emissions of HFC-23 quickly exceeded pre-CDM levels. China and India, the second largest producer of HCFC-22, pledged to reduce their HFC-23 emissions, but without a financial incentive for destroying HFC-23, many producers may have begun venting it into the atmosphere instead.

China’s Voluntary Incentives

In 2015, China required all companies building new HCFC-22 capacity to abate their HFC-23 emissions and established a voluntary incentive program, encouraging existing producers to destroy their HFC-23 emissions. China funded the program after reaching an agreement with the United Nations under which China would receive more than $350 million to protect atmospheric ozone by reducing HCFC-22 production for direct uses such as refrigerants and foam insulation.

When released into the atmosphere, HCFC-22 destroys atmospheric ozone, which protects the Earth from harmful ultraviolet radiation. When HCFC-22 is blended with other chemicals for use as a feedstock for other products, it no longer poses an ozone threat.

As part of the HCFC-22 deal, China also agreed to “make best efforts” to reduce the climate impact of byproduct HFC-23 production, as the country increased production of HCFC-22 as a feedstock for other chemicals.

Seeking to avoid mistakes made by the Clean Development Mechanism, the Chinese incentive program offered less money for emissions reductions than the CDM and limited eligibility to production facilities completed prior to the program’s implementation.

UN documents, based on reports verified by the World Bank, concluded that the program had been highly successful, eliminating 98 percent of HFC-23 emissions from eleven participating HCFC-22 producers.

Possible Holes in China’s Efforts

But with almost 16,000 tons of HFC-23 being released into the atmosphere annually, experts consider China a likely source for a considerable percentage of that total.

Ten companies in China either built new HCFC-22 capacity after April 2015 or are currently building new production facilities, meaning they were never covered by the government’s incentive program, according to government records, company announcements and Chinese media accounts.

In addition, three of the producers participating in the incentive program have expanded or are in the process of expanding their HCFC-22 production capacity, according to company documents. The expansions occured after 2015 and were therefore not eligible to earn subsidies for HFC-23 destruction.

These 13 additional plants or expansions built after 2015 that were not part of China’s subsidy program will have a total capacity of 411,400 tons-per-year of HCFC-22, if all construction is completed, according to an analysis by Inside Climate News. While most of the additional capacity has probably been completed, Inside Climate News could not verify the status of all the construction projects.

Assuming these facilities operate at the same utilization rate and produce the same percent of waste HFC-23 as plants that were part of the subsidy program, these 13 chemical plants could generate approximately 9,200 tons of HFC-23, assuming all facilities are completed.

Those emissions would equal 58 percent of the 15,900 tons of HFC-23 emissions in the atmosphere reported in the 2020 Nature Communications study, or the equivalent annual greenhouse gas emissions of 29 million automobiles.

The potential for unreported HCFC-22 production in China would not be unprecedented. The Chinese government disclosed two instances of illegal, un-permitted production of HCFC-22 that it identified and reportedly shut down, one in 2013 and another in 2014.

Similarly, widespread illegal production of CFC-11, a potent greenhouse gas and ozone depleting substance used to make foam insulation, was recently uncovered in China through on the ground investigations by the Environmental Investigation Agency and the New York Times, as well as scientific studies. CFC-11 is banned under the Montreal Protocol.

Following the recent discovery of illegal CFC-11 production in China, Stanley and his co-authors wrote in their 2020 Nature Communications study that “we cannot exclude the possibility that there is substantial, unreported production of HCFC-22 from which HFC-23 is vented” in China.

The Likelihood of Abatement

China may not be a significant source of HFC-23 emissions. It’s possible that the additional facilities and expansions outside China’s incentive program have been incinerating their emissions. A 2019 UN Environment Program report states that all HCFC-22 plants in China collectively prevented 99.8 percent of the HFC-23 they generated from entering the atmosphere in 2018. The figure is even higher than the 98 percent figure UNEP cites for the 11 Chinese plants that received subsidies to abate.

However, a 2020 assessment of the HFC-23 emissions destruction subsidy program, authored by researchers from China’s Ministry of Ecology and Environment concluded that new HCFC-22 production facilities and expansions that were not eligible to receive incentives for destroying HFC-23 are a “potential source of emissions” that “merit attention.”

Companies that built new capacity after 2015 were required to destroy their HFC-23 emissions without receiving incentives to do so. However, the requirement was part of a “circular” issued by the environment ministry that carries less weight than an official regulation.

“Under this circular, you report but there isn’t any real verification,” Hu Jianxin, professor of environmental science and engineering at China’s Peking University, told Inside Climate News. “The companies reported they incinerated, but whether they actually did, it is very hard for us to confirm.”

Inside Climate News spoke to representatives of four producers that did not receive subsidies. They all declined to comment.

The Situation After Chinese Incentives Ended in 2019

In any case, because incentives for incinerating HFC-23 emissions ceased for everyone at the end of 2019, which incentive category a Chinese chemical company falls into doesn’t really matter. Without new subsidies or regulations replacing the old incentives, scientists and experts said that HFC-23 emissions may have soared in 2020, as they did in 2014 after funding for the UN’s incentive program dried up.

The prior CDM incentive program and the more recent subsidy program administered by the Chinese government were an important source of motivation for companies, according to Han Wei, the industry program deputy director for Energy Foundation China, a nonprofit with offices in San Francisco and Beijing that funds projects addressing climate change in China.

The 2020 study on China’s emissions destruction subsidy program, authored by the environment ministry researchers, warned that without a new HFC-23 policy after the subsidies ended in 2019, there would be a lot of “uncertainty” about future emissions reduction. The authors of the report did not respond to a request for comment.

HCFC-22 Producers May Be Venting HFC-23 Emissions

Peking University’s Hu put it more plainly: With no new incentives in place, “2020 was a year without regulation,” he said.

Hu’s team at Peking University recently conducted a survey of China’s HCFC-22 producers, asking if they had destroyed HFC-23 in 2020. Most of the companies said they had, however one said it had not. In addition, two HCFC-22 companies did not have incinerators in 2020, making it unlikely that they destroyed HFC-23, according to a document published by the environment ministry in August.

“I believe that some companies definitely did incinerate,” Hu said. “For the other companies, verification is needed to confirm that they really incinerated, even though they reported they did.”

One of the Least Expensive Ways to Reduce Greenhouse Gases 

Whatever the level of compliance in China, the Kigali Amendment holds great promise for combating climate change. It would cost approximately $46 million per year to destroy the estimated 15,900 metric tons of HFC-23 emitted globally in 2018, according to a recent cost assessment prepared for the United Nations Environment Program. The figures are based on costs at HCFC-22 production facilities with existing incinerators in eastern China, where two-thirds of the world’s HCFC-22 is produced.

The carbon dioxide equivalent of 15,900 tons of HFC-23 is 232 million tons of carbon dioxide. Destroying HFC-23 for roughly $50 million per year would make it one of the least expensive ways to eliminate a large volume of greenhouse gas emissions.

By comparison, Vineyard Wind, the first large-scale offshore wind farm in the United States, now being built off Massachusetts, will offset 1.6 million tons of carbon dioxide per year at a cost of $93 million per year, spread over the expected 30-year life of the project.
In other words, the annual destruction of all of the world’s HFC-23 emissions could be done at roughly half the cost, and provide more than 100 times the climate benefit, as building a single offshore wind farm.

Simply throwing money at HFC-23 emissions will not solve the problem, as the prior Clean Development Mechanism, with it’s spurring of additional HCFC-22 and HFC-23 production has shown. Yet the chemical’s outsized climate impact and the dramatic emissions reductions that can be achieved through incineration make curbing HFC-23 emissions a top priority for climate advocates.

“It’s criminal not to abate it immediately and completely,” Durwood Zaelke, president of the Institute for Governance and Sustainable Development, an environmental advocacy group based in Washington, said. “It’s easy to abate. It’s cheap to abate. We all know how to do it. And when you don’t do it, you’re causing irreparable harm to the climate system, for what may be centuries to millennia.”

Scant Details on How to Implement and Monitor Kigali Compliance

Since Sept. 15, when China officially entered the Kigali Amendment, all Chinese HCFC-22 producers are required to immediately destroy HFC-23.

The Chinese environment ministry released a new circular to implement the Kigali Amendment on Sept. 14, laying out that requirement. The circular does not contain details about how companies should submit their emissions reduction data or how the environment ministry will verify emissions reductions, but the Chinese government is expected to provide more clarity soon, advocates said.

“In the near future, MEE is working with stakeholders to research detailed policies and measures on controlling HFCs and HFC-23, to improve the overall management of these substances under the Montreal Protocol,” said Han, of Energy Foundation China.

Chinese chemical manufacturers have also been working on methods to break down HFC-23 into other useful chemical compounds. Such recycling, while still under development, could provide a market incentive, rather than a government incentive, to stop venting the gas.

At the same time, the Chinese government has stated that it will launch a national atmospheric and local monitoring network to track HFCs in the coming years.

Even with more detailed regulations, some experts question whether measures to eliminate HFC-23 will be effective, given the ambiguity of the Kigali Amendment itself.

The text of the amendment reads that HFC-23 must be destroyed “to the extent practicable,” and existing incinerators and other devices can destroy more than 99.9 percent of HFC-23.

Still, some environmental advocates fear that the wording could give producers in China—and elsewhere—enough wiggle room to evade full implementation of pollution controls. China’s MEE notice, for example, does not state exactly what percentage of emissions companies must abate, although more detailed rules will be forthcoming.

“Under the [Kigali] agreement, companies have to destroy HFC-23 ‘to the extent practicable,’ but there is no specific level given,” Han said. “We believe that if we want to control HFC-23, for companies, a specific target is definitely needed.”

It also remains to be seen if data from the Chinese monitoring network, which could play a key role in ensuring that Chinese producers destroy all of their HFC-23, will be made publicly available.

With the impacts of climate change already upon us, Zaelke said, we can no longer afford any errors with HFC-23 emission reductions.

“The world has made serious mistakes in trying to regulate HFC-23 over the last couple of decades and it’s time we got it right,” he said. “That’s going to require constant vigilance.”