Money To Burn

In short, the Bank's bureaucracy is slowing down the process of CFC phaseout,and establishing markets for obsolete, destructive technologies throughout the South.

It is our hope that this document will prove useful for Parties to the Montreal Protocol and interested observers who wish to engage in a creative, constructive dialogue. Towards that end, Greenpeace offers the following recommendations:

Observers of the Montreal Protocol have often noted that it was industry's endorsement of the Protocol, and acceptance of the inevitability of CFC phaseout that truly paved the way for this agreement. But if that process ultimately trades one problem off for a whole host of others - including the continuing destruction of the ozone layer - it can hardly be judged as a success. If the Montreal Protocol is to fulfill its spirit and intent, then technological and developmental choices must be made consciously in a way that is both environmentally and socially just.

INTRODUCTION

In front of the delegates to the Executive Committee (ExComm) was a shocking progress report. Despite the allocation of over US$120 million only 317 tons of ozone depleting substances had actually been phased out. Most disturbingly, the World Bank, which controlled 78% of the funds, had not completed one single project.

The fact that the Bank, perhaps the single most powerful financier of environmental destruction on the planet, had been given fiscal control of what is universally hailed as the first truly global environmental treaty - the Montreal Protocol on Substances that Deplete the Ozone Layer - had long raised eyebrows in the environmental community and the South. No other single institution has come under such intense scrutiny and criticism for the environmental consequences of its actions.

Founded 50 years ago in 1944, the World Bank is the largest financier of development in the world. In 1993 alone, it loaned US$23 billion, which in turn leveraged over $100 billion worth of investments. Its loans have been responsible for the felling of an estimated 1,900,000 square kilometres of forest, and the forced relocation of millions of people. According to the Bank's own internal reports 37% of its 1991 projects were "unsatisfactory". The US Congress' Human Rights Caucus has recently noted that the Bank has never engaged in successful population relocation in the wake of its projects.

To say the least, the Bank seems a curious choice to be the primary implementing body for a treaty designed to protect the planet from the unprecedented threat of global ozone depletion.

Structurally, the Bank is controlled by the the industrialized Northern countries, who are the donors into the Bank. The top five stockholder governments (US, Japan, Germany, UK, and France) control 40 percent of the vote, with the US alone controlling 17 percent. Together with other members of the OECD, the rich countries control 64 percent of the World Bank's vote. 48 SubSaharan African nations are represented by about 5 percent of the vote. According to its original charter, the Bank's President must be an American.

The OECD dominance of the Bank has reaped many rewards for the donors. The funds that they donate - and more - return to countries and their companies in the form of lucrative procurement contracts for materials and consulting services. In effect, the Bank creates markets for Northern transnational companies in the South. As US Treasury Secretary Lloyd Bentsen recently testified before the US Congress, for every taxpayer's dollar the U.S. contributes to the Bank, U.S. contractors get back $1.80 in orders from the Bank for goods. Japanese contractors earn $1.01 for every dollar Japan pays into the Bank; German contractors, $1.51; French, $1.82; and the British, $1.85.

Nowhere is this pattern of public funds being used for corporate profits clearer than in the Bank's implementation of the Montreal Protocol. Through its selection of projects and promotion of technologies, the Bank has successfully turned the Protocol into a market development bonanza for Northern chemical companies like ICI and DuPont - the very companies that were responsible for ozone depletion in the first place.

OZONE - AN ENVIRONMENTAL IMPERATIVE (STILL)

More than two decades have passed since Dr. Sherwood Rowland and Dr. Mario Molina first theorized that chlorofluorocarbons (CFCs) in the atmosphere were destroying the earth's ozone layer. Response to the crisis has ebbed and flowed since that time, reflecting the imperfection of atmospheric science, the effects of corporate obfuscation, and the degree of political concern.

Today, for most people the ozone crisis - and the furor over CFCs - is a thing of the past. Despite annual reports of record levels of ozone depletion, alarm - and accompanying action - has largely receded. However, according to the International Ozone Commission, worldwide levels of ozone in the atmosphere have declined by about 10% since 1969. Record depletion levels continue to be recorded, and on April 22, 1993, NASA researchers measured ozone concentrations over the northern hemisphere at their lowest levels ever. Dr. Robert Watson, also of NASA, recently noted that rates of global ozone loss could double by the end of the century. Indeed, current estimates are that ozone depletion will continue to worsen for at least the next decade in the Northern hemisphere (the Antartctic ozone hole is with us until at least 2050), and perhaps even longer if institutions like the World Bank continue to providefunding for HCFCs. Only after reaching peak chlorine loading in the atmosphere (which is predicted to be more than double the level at which the ozone hole first appeared), can the long process of recovery and regeneration begin. As Sherwood Rowland recently noted, "One can safely predict that ozone depletion of some magnitude will outlive almost anyone who is alive today."

Policies which attempt to justify limited but continuing use of ozone depleting substances ignore the risk of triggerring "threshold effects", such as the Antarctic ozone hole which was sparked in 1984 by atmospheric chlorine concentrations of 2.0 parts per billion (ppb). The current level of atmospheric chlorine is 3.5 ppb, and atmospheric models are unable to predict if the same kind of widescale ozone loss will occur as chlorine concentrations continue to rise to 4.1 or 5.0 ppb. History has shown these nonlinear rates of ozone depletion to be a distinct and potentially catastrophic possibility.

For most people though, concern over ozone depletion initially peaked in the mid 1970's, which led directly to bans in the U.S., Sweden, and Canada on the use of CFCs in aerosols. In the US, the ban resulted in a 50% drop in overall demand for CFCs, and globally a 25% reduction wasrecorded. By 1984 though, production had crept back up to pre-aerosol ban levels, as chemical companies promoted their cfcs in new markets such as foam blowing, automobile air conditioning, and solvents.

The following year, as news of the ozone hole over Antarctica shocked the world, the fate of CFCs was sealed. The Montreal Protocol was signed in 1987, calling for a 50% cut in CFC consumption by 1998. Over the years, the scope of the protocol has been broadened to include additional ozone depleters such as methyl chloroform and carbon tetrachloride and HCFCs, and it has been strengthened periodically as science has magnified the scope of the threat. Even so, for all of its successes, the Montreal Protocol still sanctions the production and use of ozone destroying chemicals for at least the next three to four decades

The public concern and consequent political fallout that the ozone hole caused for politicians and corporations has largely subsided. However, the thinning of the ozone layer and the accompanying global threats to health and the environment, continues today.

INDUSTRY RESPONSE

In the wake of industry endorsement of the Montreal Protocol, chemical companies have turned to two primary alternative products: hydrochlorofluorocarbons(HCFCs) and hydrofluorocarbons (HFCs). Industry acknowledges that HCFCs will continue to destroy the ozone layer, albeit somewhat less than CFCs, and that both HCFCs and HFCs are potent global warming gases. Production and use of these chemicals are justified by the chemical industry on the basis that:

Greenpeace and other environmental organizations believe that this point of view is seriously flawed. First, industry's position overlooks recent scientific developments that underscore the need to set and meet stringent environmental targets for both the recoveryof the ozone layer and the abatement of greenhouse gas emissions. Under the terms of the Protocol, use of HCFCs in developed countries will continue until 2030 (there are as yet no controls on HCFC use in the developing world), and the use of HFCs is also uncontrolled. Many scientists have cautioned that continued use of HCFCs poses a serious risk to the ozone layer, and that unless HFC use is controlled under the Climate Convention, these chemicals could quickly become a major source of greenhouse gas emissions.

Second, and more importantly, there are more environmentally benign alternatives available today than those that the chemical companies offer. For every sector, and every former use of CFCs, better ways can be found to minimize the risk to the environment. Sadly, today these alternatives lack the global production and marketing infrastructure that supports HCFCs and HFCs, and so even when these technologies are proven, they are often dismissed as not being "commercially viable".

It is widely recognized that the political turning point in the Montreal Protocol negotiations was industry's endorsement of the treaty -and recognition that there was a profit to be made by whichever company could capture the CFC replacement market. This drove much of the subsequent evolution of the Protocol, and eventually the Fund as well. Industry offers of alternatives(although their initial position was that substitutes for CFCs were still years away - despite at least a decade of previous research) provided a framework of possibility for governments to point to in crafting the Protocol. Unfourtunately, that framework defined the problem at its most narrow - i.e. how to replace CFCs. As the Protocol has evolved (and the scope of the environmental threat has become more apparent) more chemicals (including HCFCs) have come under the heading of "controlled or transitional substances" that are destined for phaseout. But the concerns of private industries continues to dominate the decisions of the governments that are parties to the Montreal Protocol. This dynamic is particularly reinforced by the selection of the Bank as the primary implementing agency. As long as this dynamic remains, it is extraordinarily difficult for groups and countries engaged in the process to point out that both the North and the South must strive towards the most ecologically and economically sound development and technology choices available.

Industry promotion of transitional substances has had a chilling effect on the development of "not-in-kind" alternatives (NIKA's). In 1992, the UNEP's Technology and Economics Assessment Panel noted that: "...the development of technologies which do not use either controlled or transitionalsubstances can be inhibited because the prospect of technology using transitional substances discourages investment in technology that would only be profitable if transitional substances were not acceptable." The Bank's dismal record of the usage of not-in-kind alternatives underscores this statement.

Industry participation in the Protocol has been a double-edged sword. On the one hand, without industry the initial agreement may not have been reached. On the other, industry's influence at all levels of negotiation and implementation has served to define questions and answers in ways that are almost always in the interests of the chemical companies - but not always in the best interests of the environment or the people in it.

GREENFREEZE

Greenpeace has campaigned to protect the ozone layer by showing that there are alternatives to virtually all CFC applications that do not require the use of HCFCs or HFCs. In the case of domestic refrigerators, Greenpeace intervened in the market by helping a German company bring a refrigerator based on hydrocarbons onto the market. In March of 1993, the first "Greenfreeze" rolled off the production line.

Two years ago, industry was adamant that hydrocarbon technology would take many years to develop, maintaining that it was not a viable option at that time. "Maybe some time next century there will be better answers than HCFCs and HFCs" said Dr. Mike Harris of ICI (currently an advisor to the World Bank).

Today, Greenfreeze refrigerators are the standard in Western Europe (e.g. Electrolux has just committed to convert their entire European production to hydrocarbon technology), and partial models are being sold in Japan and Australia as well. In the UK, the Calor Gas company is now marketing its "CARE 30" hydrocarbon blend as a drop in replacement for CFCs. The technology is established, cheap, energy efficient, and reliable.

The World Bank's grant patterns have yet to reflect this industry shift. Out of 176 projects and US$92 million from the Multilateral Fund, only one of the Bank's projects uses Greenfreeze technology (a grant to Brazil which will convert a plant to the use of cyclopentane in foams - although it also gives money for HFC 134a as a refrigerant). Even though its own advisory bodies have labeled Greenfreeze technology viable (and in some instances superior to fluorocarbon alternatives), the Bank seems intent on the exclusive promotion of chemical company alternatives.

INTERSECTING CRISES -ENVIRON MENT AND DEVELOPMENT

For industry and goverment though, the real test has just begun. Balking under pressure from the automobile industry last year, the Clinton administration requested that DuPont continue its production of CFCs right up until 1996 -despite the fact that DuPont had promised to phase out by 1995. Under the revised terms of the Protocol, January 1, 1996 is the deadline for production in Northern countries of CFCs. Southern countries - whose consumption of CFCs has risen sharply (a 54% increase was recorded between 1986 and 1991)11 have another decade to phase out CFCs. Developed countries must gradually phase out HCFCs by 2030, but there are as yet no requirements for southern country phase out of HCFCs.

Although they initially accounted for only 10% of global CFC consumption, delegates to Protocol meetings in 1989 recognized that uncontrolled consumption of CFCs in the South could eventually dwarf current Northern consumption. What, delegates asked, must the North do to help the South phase out of ozone depleting substances (and not incidentally, to protect Northern citizens from the effects of ozone depletion). The answer, finally given at the London meeting of the Parties in 1990, was the creation of the Interim Multilateral Fund for the Implementation of the Montreal Protocol, which became permanent at the 1992 meetingin Copenhagen. Although noble in its recognition of industrialized country responsibility for ozone depletion, the Fund's structure implies that Northern institutions and corporations can supply the answers.

A large part of the problem here lies in the intertwining of environmental and developmental issues. Throughout the South (and the North as well, just less obviously), environmental and economic impoverishment are related to development aid and techology transfer. The same multilateral development banks and UN agencies that currently administer the Multilateral Fund have a history of working puposefully to open new markets for trans-national corporations (TNCs). In addition, in cooperation with many Southern governments (often driven by the need for hard currency for debt repayment) these institutions exercise broad power beyond the size of their loans through the application of tough conditions attached to their lending (see Structural Adjustment vs. Institutional Strengthening).

On all fronts, the environment is showing global signs of stress and collapse. Overfishing, persistent bioaccumulative toxins, vanishing forests and species, climate change -all of these are effects of human systems on our collective environment. Modern industrial models of development are at the heart of each of these problems. Todate, these models have consistently proven to be both socially inequitable and ecologically destructive. For instance, as a country becomes more indebted to the Bank, it increasingly is forced to use its scarce capital for debt repayment, rather than stewarding its own natural resources, or aiding its own poor. Any effort to solve global environmental problems must look at development issues as central to their solution.

Today, a first time observer to a Montreal Protocol meeting would be hard pressed to know where she was. Debates and discussions in the various Protocol fora rarely hinge on either environmental or equity related issues - much more common are discussions on economic viability, relative competetiveness of various technologies and methods of cost calculation. Despite the Protocol's many successes, it is now dominated by publicly unaccountable institutions and mechanisms of finance and trade (e.g. the World Bank and TNCs). At a fundamentally systemic level, these institutions serve to obstruct rather than encourage efforts to develop local, national, and global economies along equitable and sustainable lines.

As an example of how these institutions bias technology choices and development paths, consider the concept of cost-effectiveness. A prime purpose of the World Bank's Ozone Operations Resource Group (OORG) is to "reviewwith the Bank staff...the emerging strategy for rapid cost-effective phase out of ODS". Of course, how one defines cost-effectiveness is central to how this strategy emerges. External costs (other than a skewed representation of ozone depletion potential (see box below) - and in select cases global warming potential) are not factored in to this definition of what is cost effective. In general, the Bank (and the Fund overall) define cost-effectiveness as "the lowest possible amount of funds required to eliminate the maximum amount of controlled substances during a certain period of time". Defined in this way, very often the most "cost-effective" project is the implementation of an incremental step, e.g. 50% reduced CFC technology in developing countries. If the analysis of cost-effectiveness stops there, it does not factor in the subsequent costs involved in the transition to zero-ODS technologies.

Finally, there is an ethical and social dimension involved with these technology choices that is never discussed and impossible to quantify meaningfully. If a Southern country chooses (or feels forced to choose) a chemical company alternative, that choice also entails a dependence on the chemical companies. Technology choices which foster local economies based on sustainability, social equity, and popular participationwould almost certainly do more to stop the patterns of industrial development that led to ozone depletion in the first place.

Southern country governments, for their part, can see the Protocol as an opportunity to leverage more money from the North. Under the rules of the Fund, the amount of money that a Southern country is entitled to - its baseline -will not be determined for several years. Thus it can be seen to be in the financial interests of a country to increase its consumption of ODS until that baseline calculation is made. In a recent case, India projected how many CFCs it could , consume if it constructed CFC plants up until the 1998 deadline for plant construction. The Indian government essentially said it will construct those plants -what some Northern governments have called blackmail - unless the North operating under the Fund compensates it for the production that could have been.

On the other hand, considering the long history of uncompensated resource extraction from the South, not to mention the debt trap that many developing countries find themselves in, who is to blame the Indians for maximizing the amount of compensation they can legally claim (and indeed, were promised at the creation of the Fund)? In a system like the Fund which doesn't address the fundamental inequality of North-South relations, its utopian to believe that the South will simply set aside its long standing grievances -simply because the global nature of ozone depletion has forced the North to realize that we are all in the same boat.

THE BANK'S OZONE OPERATIONS

The Multilateral Fund is managed by an Executive Committee which is assisted by a Secretariat. The Executive Committee, composed of 14 members with equal representation from developing and developed Parties, approves funding and develops guidelines for the administration of the Fund. Fund assisted activities are implemented through four implementing agencies: the United Nations Environment Programme (UNEP), the United Nations Development Program (UNDP), the United Nations Industrial Development Organization (UNIDO), and the World Bank.

-from the UNEP Information Kit on the Multilateral Fund

The Bank is the central implementing agency for the Fund. "Since the inception of this funding mechanism, the Bank has been responsible for channelling about 80% of MFMP (Multilateral Fund of the Montreal Protocol) resources to eligible developing countries"16. The most recent funding cycle has increased UNDP's share to about 25% , and decreased the Bank's share to about 60%, but the Bank still stands at the center of it all.

This is by design. In the London meeting of the Parties in 1990 the US was adamant that the Fund be operated and administered by the Bank - the compromise that was eventually reached meant that the other implementing agencies were given a share of the resposibility, but "the World Bank, and specifically the president of the Bank, was clearly designated as the administrator and manager of the central function of the Fund: financing projects, and programs to meet the incremental costs of article 5 [i.e. Southern] parties (annex IV, appendix IV)".

As of May 1994, the World Bank is the implementing agency for 176 projects amounting to $92,193,000 - 60.6% of the total money allocated by the Fund.18 The largest allocation of funds, both to the Bank and other agencies, is for the refrigeration sector, with foams a close second.

In March of 1994 it was revealed that all the Bank expenditures to date had not yet yielded a single ton of ODS phased out. At the next ExComm meeting, four months later, the Bank reported the phase out of 245 ODP weighted tons, although as the Secretariat noted, 45 of these tons were reported as phased out "before the grant agreement for these projects became effective and before any funds were disbursed". The other 200 tons were from a 50% reduced CFC project in Turkey.

Indeed, of all the implementing agencies, the Bank relies to the greatest extent on the use of controlled, transitional, or other chemical company alternatives (CCA's). At the 13th ExComm meeting in July 1994, a delegate "noted with satisfaction the progress on certain critical issues and believed that UNDP and UNIDO deserved special credit for moving away from transitional substances."

While none of the implementing agencies are performing as well as they might (see table below), the United Nations Industrial Development Organization (UNIDO), and the United Nations Development Programme (UNDP) are both outperforming the Bank in two critical ways: they are generally choosing more environmentally friendly technology (although UNDP continues to rely heavily onHCFCs), and they are getting the money to the field faster. The fourth agency, UNEP, plays an overall clearinghouse role, rather than project implementation.

UNIDO has virtually stopped funding HCFC 141b, noting in their submission to the most recent ExComm meeting that "because of the high cost of making innerliners which are resistant to HCFC 141b, the use of this product is no longer considered to be the most cost effective"21 UNIDO has recently stopped two projects, in Egypt and Iran, in midstream, to reorient them towards foams blown with cyclopentane rather than HCFC 141b.22

The table below (reprinted partially from the Fund Secretariat's "Overview of Issues", published in June of 1994 at the 13th ExComm) was prefaced with :"The implementing agencies should make an earnest effort to accelerate implementation and disbursement"

The Bank has come under increasing scrutiny because it is not getting money to the field, and it is not phasing out ozone depleting substances. As the Bank puts it: "...project implementation fund disbursements have yet to meet EC [ExComm] members' expectations, leaving an impression with some Parties to the Protocol that issues in the Bank's investment operations are having negative consequences for project implementation."

An underlying concern here is that the Bank is simply too big to effectively manage CFC phaseout projects. Again, as the Bank puts it: "Ozone protection projects tend to be smaller- scale and require more on-site coordination and assistance than traditional Bank line of credit based projects." In classic fashion, the Bank has moved to correct this by consolidating smaller agreements into overarching or "umbrella" grant agreements. This system, the Bank claims, will reduce the "administrative burden" of separate agreements. As the subsequent ExComm debate noted though, it will also reduce oversight of the Bank's projects. The Bank responded to its critics by reorienting the critique at the Fund's system of project approval and oversight. At the 13th ExComm meeting, the Bank unveiled its proposals for streamlining of the process. It wanted more money for umbrella agreements, and the authority to approve projects less than US$500,000 ("Small Project Approval Process - SPAP").

ExComm members and the Fund Secretariat reacted harshly to the Bank's proposal. In its preface to the Bank's progress report, the Secretariat stated that the Bank proposal reacted to "a problem that does not currently exist, i.e. there are delays in providing funding for projects and activities costing below US $500,000 from the Executive Committee. Projects under US $500,000 can be approved in work programmes once a year, work programme amendments two to four times a year, and inter-sessional approval anytime during the year. The Bank has yet to use more than 80 per cent of its annual work programme request and has reported only a 15 per cent use of its current work programme budget".

The US delegation pointed out several other flaws in the Bank's analysis, including the fact that while the Bank had already been granted a US$4 million line of grant in Mexico, it had only actualized US$1.5 million in projects "suggesting that the proposed World Bank process might not significantly speed up the process either.". At the end of the day, the US brokered a compromise which maintained ExComm oversight of projects and may streamline the aproval process somewhat. It was approved on a six month trial basis. Ultimately though, the message from the ExComm to the Bank was quite clear - don't blame others for your own problems. "We caution you to be skeptical about claims that technologies other than those using HFCs and HCFCs are viable in the near term for all current CFC applications. You should question their environmental acceptability, safety, energy efficiency, and ability to be mass produced to meet society's needs" DuPont testimony before US Congress, 1990

TECHNOLOGY CHOICES

Since CFC phase-out began, many environmental organizations have maintained that a reliance on chemical company alternatives will create more problems than it solves. HCFCs are still ozone depleters (see "Ozone Depletion Potential and HCFCs") and both HFCs and HCFCs are potent greenhouse gases.

The major markets for both of these chemicals are in refrigeration and foams. In the case of refrigeration, HFC-134a has emerged as the major alternative substance being offerred by the chemical companies (although certain HCFCs have segments of the market). On the foams side, HCFC-141b is the "most promising" of the chemical alternatives - although in the short term a formulation of CFC blown foam which uses 50% less of the infamous chemicals is being widely used and promoted (the European market switched to 50% reduced CFC blown foam in the mid-80's).

Not-in-kind alternatives (NIKAs), which are favored by the environmental community, can generally be understood to be all non-fluorocarbon options. In some cases, NIKAs are simply a process redesign, which results in the elimination of the need for the ozone-depleting substance. For instance, rather than finding another substance to clean their computer chips, the electronics industry has generally redigned their products so that no-cleaning is required. For some sectors of CFC use though - to the extent that modern conveniences (e.g. foams, refrigerators, and mobile air conditioners) are deemed to be necessary - another substance must be used. For foams and refrigeration, the most promising NIKAs are naturally occurring substances such as water, carbon dioxide, and hydrocarbons28. Many of these technologies are already well established, and have become the industry standard for applications such as the blowing of extruded polyethylene and extruded polystyrene. For other NIKA applications, such as the use of iso-butane in domestic refrigerators, the last two years have made all the difference (see "Greenfreeze").

Although the aerosols sector represents 41% of the remaining ozone depleting substance to be phased out in Southern countries, Bank grants to that sector represents less than 9% of project allocations to date.

The Fund overall is even worse - with only about 5% of total grants devoted to aerosols. As Figure 2 (above) shows though, Bank grants are heavily skewed towards both the refrigeration and foams sector.

An examination of the refrigeration and foams sector of the Bank reveals a disturbing bias towards chemical company alternatives, and away from not-in-kind alternatives. Despite the fact that hydrocarbons have emerged as the most environmental and economic refrigerant (for most applications), there are currently no Bank projects that fund this technology.

As the following section details, there are numerous problems associated with the implementation of HFC technology. Unfourtunately, the Bank seems intent on spreading this technology (and dependence on transnational chemical companies) around the world.

The foams sector is less monolithic, but still dominated by chemical companyaltern atives. Even more disturbing is the fact that fully 75% of the grants in this sector goes to support technologies which deplete the ozone layer.30 Another 10% goes to fund methylene chloride, which has been classified as a low-potency carcinogen. According to the Swedish government, chemical products containg methylene chloride must bear a notice warning users of a cancer risk.31 The Bank is using taxpayer money that is given to phaseout ozone depleting substances to fund these technologies.

Three seperate projects (two in China and one in Venezuela) are using hydrocarbons to replace CFCs in foam blowing. However, all of these projects are for the manufacture of extruded polystyrene or polyethylene - technologies for which hydrocarbons are clearly accepted as the most economical, and efficient options.

Fifty-six (56) percent of the Bank's grants in the foams sector goes to domestic refrigerator insulation - all of it to 50% CFC technology or HCFC-141b. This pattern flies in the face of developments in Europe and Japan - where the NIKA cyclopentane is rapidly taking over the insulating foams market. Despite the fact that the Bank advisors found cyclopentane to be a "viable" technology in October 1993, only one project using cyclopentane is even being worked on (a project in Brazil, that is still under preparation).

Whether the technology bias that is evidenced above is deliberate or accidental is perhaps beside the point. The real tragedy is that developing countries are being fed obsolete, dangerous technology - and that this pattern places the global environment at risk.

WHO IS THE OORG?

Although the Bank insists that the OORG is an independent panel of experts, capable of objective assessments, virtually all of them are in fact, either directly or indirectly linked to industries that have profited from the sale and use of ozone depleting substances. Even assuming that these individuals operate with the best of intentions, it is hard to imagine that conflicts of interest do not arise from time to time.

As shown, two of the seven OORG Working Group chairs are currently employed by ICI. Dr. Michael Jeffs, of ICI's polyurethane foams division is the chair of OORG's Foams working group. Dr. Michael Harris, the public relations manager for ICI, is Chair of the OORG Production working group. It is inconceivable that these two men are not aware that their capacity as"independent, objective" experts positions them ideally to ensure long term market shares for their company's products in the developing world.

As Dr. Harris noted in 1992:

"...I can assure you that any company which has already invested 250million pounds in replacements for CFCs, as we have, is hardly likely to want to see the expensive new plants sit idle while people keep on using CFCs! "

The same concern, of course, would also apply if people wanted to use other, more environmentally friendly replacements for CFCs.

The Chair of the Refrigeration sector working group, Dr. Lambert Kuijpers, is co-owner of A\Gent BV, a private consulting company that he helped form after leaving Philips Research Labs (Dr. Kuijpers is also connected with A\Gent's sister company, RE\Gent BV - it is not clear what the division of workload is between these two entities). The two primary sources of income for A/Gent BV are a grant from the Dutch government of HFl 925,000 (about 530,000 US$) for Kuijpers' UNEP work, and projects for transnational chemical companies (rumored to be Du Pont). Kuijpers is one of the most influential people in the global refrigeration industry at the moment. In addition to his OORG position, he is the chairman of the Refrigeration Committee of UNEP, and co-charman of the overall UNEP Technology and Economics Assessment Panel (TEAP). Despite his overall professional demeanor, Kuijpers has nonetheless been a steady and vocal skeptic of any not-in-kind technology.

In his capacity as OORG sectorchair Kuijpers is often called on to review proposed Bank projects. In January of 1994 Kuijpers was presented with a proposed project to replace CFC-12 compressors in India. In his review of the project Kuijpers wrote: "Other technologies than HCFC-22 were not considered, and there is no reason for it". As a result of this type of statement, many Dutch cooling experts and governmental officials are privately critical of Kuijpers' performance.

During one memorable OORG meeting in February of 1994, Kuijpers described how virtually all of the German refrigerator manufacturers were now using hydrocarbon technology - an astonishingly fast transition that had mostly taken place over the previous six months. Kuijpers concluded his presentation on the state of the market by noting that "no significant changes" had taken place. One was left to wonder exactly what Mr. Kuijpers would consider significant.

OBJECTIVELY BIASED - OORG TRANSFER OF TNC TECHNOLOGY

The cause of the explosion is still under investigation. According to an article in ChemicalWeek "The initial suspicion that it might have been caused by maintenance equipment has been discounted. Industry experts suggest that as the epicenter of the explosion was in a finished product tank it is unlikely that there is a problem with the actual chemistry of R134a production. It is believed that air got into a storage container during maintenance work. It is possible that under certain temperature and pressure conditions air and R134a mixtures could be explosive" (emphasis added).

NERVOUS NEIGHBORS

A recent report by the US Environmental Protection Agency on the dangers of HF found that "An accidental release of HF...could have severe consequences. A variety of worst case scenarios all show that HF could generate severe impacts beyond 10 kilometres from the point of release". Indeed, according to industry-sponsored tests conducted at a Department of Energy test facility in the Nevada desert in 1986, a release of hydrofluoric acid forms a dense, ground-hugging cloud of gas and small droplets that, following a two minute, 1,000 gallon spill, could prove lethal as far as five miles downwind.

As an example of the volumes of HF that flows through chemical factories, DuPont's 134a plant in Dordrecht, Netherlands, consumes over 2 million US gallons of HF per year or, over 5,000 gallons per day. Clearly, the potential for a Bhopal-type disaster is real - even under the most stringent of safety regimes.

In contrast to the silence on the hazards of HF, a recent paper prepared for the ExComm on the uses of HCFCs notes that:"though environmentally sound, the fire risk relating to the use of hydrocarbons and restrictions imposed by such risk become a drawback on its acceptability. Given the problems associated with zoning and physical planning in some developing countries, resulting in absence of properly segregated industrial activities, this factor could be quite significant..."

Although the World Bank's Montreal Protocol Operations have not directly funded the construction of any HCFC or HFC plants (yet - the Bank is currently preparing a project for an HCFC 22 plant in China), their funding of this technology for current users of CFCs is a key factor in determining the extent of the markets for these products. This determination, whether made by independent chemical manufacturers in developing countries, or transnational chemical companies, directly affects and endangers the lives of people around the world who work in or live near chemical factories. The implications of this statement are clear - under the wrong conditions (whatever those may be) virtually any container of R134a can explode. While it is important to note that initial indications are that the dangerous conditions could only exist during the production of 134a, it is impossible to make a final determination until the investigation is complete. Given this uncertainty, a certain amount of caution would seem to be prudent. When it comes to HFCs though, the OORG overlooks this potentiality.

The explosion of the Hoechst plant is more than a little ironic. Of the two leading zero-ODS technologies for use in refrigeration [Nervous Neighbors - 40 41 42] R134a and iso-butane), iso-butane is the one whose usehas been cautioned due to its flammability. In May of 1994 (two months after the Hoechst explosion) OORG experts said:

Perhaps the most remarkable outcome of the meeting was the Working Group's recommendationof two zero-ODS technologies -HFC134a and iso-butane - for implement ation in Montreal Protocol funded projects in developin g countries . The Group endorsed HFC134a for all household refrigera tor and freezer applicati ons [note the lack of condition ality or reservati on - ed.] and iso-butane for many applicati ons (certain applicati ons such as no-frost refrigera tors may never be possible due to possibly unavoidab le safety risks). In any event, the experts recommended that stringent safeguards and rigorous technologytransfer agreements be built into developing country projects whenever flammable hydrocarbons, such as iso-butane, are contemplated.

At the time this was written, millions of domestic refrigerators using isobutane as the refrigerant were being manufactured by major appliance companies such as Bosch-Siemens, Liebherr, and Electrolux. No major malfunctions are known of -let alone an explosion of the type that destroyed the Hoechst plant in Frankfurt. In addition, in September of 1994, Greenpeace learned that Liebherr had overcome the techical hurdles involved in producing a no-frost model of the hydrocarbon refrigerator, and production will begin in early 1995.

Safety standards and full disclosure regarding the range of potential environmental and health effects of any technology are, of course, desirable. However, the examination of the impacts of any and every technology must be even-handed if any meaningful objective assessment is to be made. The OORG is to be commended for its very thorough evaluation of the potential hazards of hydrocarbon refrigeration and foam technologies, but unless that evaluation is balanced by a similar examination of the other alternatives, any decision made on the basis of OORG information alone would not be fully informed. Indeed, OORG documentation would lead one to the conclusion that HFC 134a was virtually hazard free - aconclusion which is based on incomplete information.

Nowhere in any Bank or OORG document are the potential long term hazards of HFC 134a discussed. According to the 1991 AFEAS (an industry coalition) report, mere sunlight can react with HFC134a to produce hydrogen fluoride (HF - see Nervous Neighbors) and trifluoroacetic acid (TFA). Further interactions can produce monofluoroacetic acid (MFA), which is so toxic that its use has been considered as a chemical weapon.

OUT OF THE FRYING PAN, INTO THE FIRE

The Bank's endorsement and promotion of chemical company alternatives can be a very subtle process. In June of 1994, a consultant retained by the Bank's OORG, Mr. David Gibson, travelled to Argentina. The visit was part of ongoing discussions between the Bank, Argentinian environmental officials, and industry regarding strategies for the phase out of ozone depleting substances.

Gibson was a featured speaker at a two-day seminar organized by INTI (National Institute of Industrial Technology) at the Industrial Union of Argentina. Representatives from all areas of the refrigeration industry were in attendance. Gibson was introduced to the gathering by a representative of the World Bank as an expert on refrigeration. After listening to Gibson's presentation, a representative of Greenpeace took issue with Mr. Gibson's statements - particularly those surrounding the relative energy efficiency and flammability of cyclopentane. In response, a DuPont spokesperson rebutted Greenpeace, which finallyprompted an engineer from Koh-I-Noor (an Argentinian refrigerator manufacturer) to affirm Greenpeace's objection to Gibson's presentation.

The following day during a sub-group session on domestic refrigeration, Gibson seemed to have no problems with cyclopentane. However, Gibson insisted that 134a was the best long term substitute for CFCs currently available - the implication being that if the industry in Argentina chose not to go towards 134a, they could not expect financial assistance from the Fund and the Bank. This inference, though subtle, was underscored by the information that while compressors for 134a were available now, compressors for iso-butane were not. At the time, Embraco, a major Brasilian compressor manufacturer and supplier for the Argentinian market, had already contracted with the Austrailian company Email to supply hydrocarbon compressors (although that contract will not be fulfilled until the first quarter of 1995).

Subsequent to this meeting officials of the Argentinian government have expressed frustration that Gibson would bias the process in this way. Indeed,government officials have said that Gibson is not welcome to return to Argentina as an "expert" on refrigeration.

Although the Argentinian government officially expresses no preferences for substitute refrigerants, some officials have acknowledged a preference for 134a based primarily on concerns about the continuing availability of monies from the Fund. This dynamic, a fear that if conversion monies and contracts are not secured now they never will be - based on the political perception that the North may not renew its support for the Fund - is currently a major concern in virtually all Southern parties to the Protocol.

To a large extent, the damage may be done. As long as industry has reason to believe that the Bank will only fund them (or are much more likely to) for 134a conversion, then there really is no decision to make.

Therefore, as countries (in particular the US and the UK) have prepared their plans to meet their targets under the Climate Convention, they have looked towards controls on HFCs. For example, the United States Climate Change Action Plan states that:

President Clinton is directing the EPA to use its authority under the Clean Air Act to narrow the scope of uses allowed for HFCs with high global warming potentials where better alternatives exist.

OORG advisors and industry spokesman go to great lengths to show the environmental acceptability of their products. First, they argue that the global warming potential (GWP) of 134a is not nearly as high as it might appear to be: All that is needed is a change in perspective. By calculating the GWP over a 100, or even 500 year time frame they distort the impact of these chemicals in the atmosphere -particularly because HFCs only last approximately 16 years anyway. Second, they will say that this is not really an issue, since only minutequantities of HFC 134a can be expected to leak out of supposedly "closed systems". However, according to the UK Government Building Research Establishment:

Leakage can also be a consequence of conversion to a new refrigerant. For example, when a CFC12 or CFC502 machine is converted to HFC 134a, leakage is more likely to occur because the HFC 134a molecule is smaller and can permeate through openings more easily. HFC 134a also has powerful solvent properties and could, for example, cause a sealing film of oil between a flange face and its mating gasket to be flushed away, creating a route for refrigerant leakage. Another problem is that the new refrigerant may react with, and cause dimensional changes in, certain elastomeric materials in seals and gaskets.

Finally, OORG advisors and industry spokesman will advocate an examination of the Total Equivalent Warming Impact (TEWI). TEWI incorporates the energy efficiency of the system into calculations of the technologies impact on global warming. TEWI assumes that whatever energy source is running the appliance contributes to global warming (a reasonable assumption today, but debatable in the near future as fossil fuel use becomes increasingly curtailed, and renewables more widespread). In short, if a product is sufficiently more efficient, its direct impact on global warming would becancelled out by its need for less, say coal, to run it. The OORG states that:

There was broad general consensus that...the relative energy efficiencies of the various refrigerant options were similar...While further technological advances could be anticipated, it was not possible to predict whether or not any of the options would derive a long term advantage in terms of energy efficiency.

This statement contrasts sharply with the view from UNEP:

Testing to date shows that refrigerators with HC-600a (iso-butane) systems are nearly always more efficient than equivalent ones using HFC-134a and often more efficient than those using CFC-12.51

All of the refrigerator manufacturers who have converted to HC-600a report similar findings to those of UNEP. This kind of conflicting information and confusion around what should be relatively clear cut technical issues has characterized the Bank's OORG. This confusion serves the interests of the chemical companies (and hurts the environment) in several ways. First, as developing countries receive conflicting signals regarding the viability of CFC replacements, they delay investment decisions - thus continuing their use of CFCs. It should be noted that the price of CFCs - and thus industry profits from theirsale - has risen dramatically in the past several years, as phaseout is anticipated. Secondly, not-in-kind technologies such as hydrocarbons are not supported by the global marketing infrastructure of companies such as Dupont, ICI, and Atochem. The longer that Article 5 countries receive conflicting signals from the North, the more effective the in-country representatives of chemical companies become.

HCFCs AND CYCLOPENTANE

The two leading chemical company alternatives in the foam sector - 50% reduced CFCs and HCFCs - both deplete ozone, both are controlled or transitional substances, and both will require a second or third investment to move an enterprise to a zero-ozone depletion technology. Despite this, and the clear intention of the Parties to the Protocol expressed above, the Bank has overwhelmingly favored these options.

This clear bias towards chemical company alternatives is particularly blatant given the current state of the domestic refrigeration foams market. Cyclopentane has become the industry standardin Europe, has recently gained a market share in Japan, and its use is continuing to spread rapidly.

In late 1993, after an intensive lobbying campaign by Greenpeace, the OORG Foams Working Group, chaired by Dr. Michael Jeffs of ICI, declared cyclopentane to be a "viable" option for use in foams for domestic refrigeration. In May of 94, the Working Group went farther, saying that:

"Cyclopentane technology is commercially proven and is the most cost-effective of the zero-ODS technologies."

This statement is carefully worded ("of the zero-ODS technologies") so as to avoid a direct cost comparison to HCFC 141b - which is the primary competion for cyclopentane. Although the formal OORG recommendations avoid any such comparison, a Greenpeace observer was present at the May working group and heard the debates which took place there. Despite the best efforts of the chemical industryrepresentatives present, it was clear that cyclopentane was much less expensive than HCFC 141b.

The main reason for this discrepancy in cost is that when using HCFC 141b, an enterprise must also buy special highly priced liners. HCFC 141b dissolves the traditional liners used in refrigeration insulation, whereas cyclopentane is compatible with them. In addition, cyclopentane is simply a cheaper substance to manufacture (about US$1 less per kg) and that cost is expected to go down as demand increases.

Capital costs for cyclopentane projects are initially higher, because of the necessity to convert the production lines to cyclopentane, but in time, the reduced operating costs negate this one time cost.

Much of the discussion at that meeting revolved around the relative energy efficiency (insulating value) of the two foam options. The American and British members of the group greeted with great scepticism the news from Japan that Sharp and other Japanese manufacturers had succeeded in getting insulation values that were equivalent to or greater than CFC-11 with cyclopentane.

Indeed, test results by various manufacturers, and independent engineering firms, show that overall, the efficiency of cyclopentane blown foams compares favorably to CFC11, 50% reduced CFC11 and HCFC 141b blown foams. Of course, test results do vary. A recent study by Lematic Engineering, states that: "The technical data shows that with pentane [one gets] the same thermalconductivity values, with the variation between 2% and +5%, can be reached in comparison to CFC11, but in any case, better values than [with] HCFC and HFC blown [foam]."

In Vienna in the fall of 1995, the Parties to the Protocol will meet to decide the future of HCFCs. The North is already set to phase them out by 2030 or earlier, (2015 in Europe) but there are as yet no controls on Southern consumption of HCFCs. Whether and when those controls will take effect will be on the table in 1995. Unfourtunately, the Bank has already approved 16 projects totalling US$7,686,500 using HCFCs, which has in effect "addicted" Southern countries on this transitional substance.

OZONE DEPLETION POTENTIAL & HCFCs

But many ozone scientists have stated that the use of longterm ODPs for crafting policy is inappropriate for the protection of the ozone layer in the short to midterm. Susan Solomon and Daniel Albritton, two of the United States' most respected atmospheric scientists, concluded in 1992 that, "long term ODPs were not appropriate for making shortterm (decade scale) forecasts [of HCFC impacts on ozone losses]"

A more accurate measure of a chemical's capacity to destroy ozone is chlorine loading potential, or CLP, which is not based on longterm models as ODPs are, but on more straightforwardcalculations and observations of how much pollution actually gets into the lower and upper atmosphere in the short to mediumterm. If CLPs were used, HCFCs would be seen as significantly more damaging than ODPs make them appear. For example, The United Kingdom's Stratospheric Ozone Review Group reported that the relative impact, in terms of chlorine loading, of emissions of HCFC141b after 10 years would be over half that of a similar emission of CFC11, yet its longterm ODP is only 0.08 (CFC-11=1).

According to the UK's Stratospheric Ozone Group ".if HCFCs are utilised up to the maximum allowed under the current levels of cap on consumption, they have the potential to add to the peak [chlorine] loading and to prolong the period for which the loading is above any particular value. The time for which chlorine loading is above the 1990 level could be prolonged by up to eight years. The additional risk imposed by chlorine levels above those of 1990 remains a serious concerna and further control on HCFC emissions is one of the remaining options to reduce the risk." .

Because of these concerns, the European Union has moved to fully phase outHCFCs by 2015 (15 years ahead of the current schedule for developed countries under the Protocol). The Danish EPA has gone a step farther, issuing an order that will phase out HCFCs by 2002.

STRUCTURAL QUESTIONS AND THE BANK

TRANSPARENCY & PUBLIC PARTICIPATION

The World Bank is the instrument of elite, not popular, participation. Although the Bank has recently opened a public information center, access to information is tightly restricted. Most project preparation documents, as well as environmental and social impact reports, are witheld. These kinds of restrictions are particularly inappropriate in the implementation of a publicly funded global environmental treaty - like the Montreal Protocol.

Indeed, research for this report was greatly hindered by the lack of information, and the presence of conflicting pieces of information. Bank documentation that is supplied to the Multilateral Fund Secretariat, and subsequently published at the ExComm meetings is unnecessarily dense and notoriously incomplete. It is often incompatible with the reporting from other agencies (ExComm is now trying to forceall the agencies into a standard format). The net effect of this lack of transparency is to make informed policy decisions virtually impossible for members of the ExComm. When delegates to the ExComm can't get straight information, it should be obvious that well meaning individuals or enterprises in the field are even more in the dark.

STRUCTURAL ADJUSTMENT VS. INSTITUTIONAL STRENGTHENING

The net effect of these programs has been to force developing country governments into a situation where in order to comply with SAPconditions they must boost their exports - which are more often than not products of their natural environment, such as timber, fish, and cash crops. In the rush for foreign exchange, these natural resources are undervalued. The reduction in domestic spending means less money available for the enforcement of environmental laws - not to mention the alleviation of poverty and hunger.

Structural adjustment programs work at cross purposes to Bank Montreal Protocol Operations. One of the earliest stages of implementing agency involvement in Article 5 country ODS phase out is what is known as "Institutional Strengthening". The need for this is stated by the Bank as:

Developing country administrations are frequently constrained by "severe budgetary limitations caused in part at least by:

1. limited local resource mobilization capacity;
2. low salaries and other incentives to retain skilled staff;
3. limited foreign exchange availability;
4. few resources other than official development assistance to obtain technical assistance not available domestically."

Whats more, the vast differences in money allocated to SAPs as opposed to Institutional Strengthening reveals the latter to be little more than green window dressing on the Bank's otherwise destructive practices. At the end of 1991, 75 countries had received adjustment loans totalling more than US$150 billion63. By comparison, as of May 1994, US$7.93 million has been provided, by all the implementing agencies, to 36 Article 5 countries for institutional strengthening activities 64.

OPTIONS

In China, the Qingdao company is planning to convert to hydrocarbons by the next Chinese New Year. Greenpeace, which has sent three delegations to China over the past year, helped to link Qingdao with the GTZ (German government agency for technical cooperation), and the German company Liebherr. In both India and China, Bank grants to date have only been for chemical company alternatives.

Projects such as these illustrate that the only real barrier to environmentally sustainable development is the will to try. Even if individuals within the Bank do possess that will though, their actions are blocked by the actions of a bureacracy that tends to reward only mega-projects (as Bank critic and economist Herman Daly recently noted "efficiency inthe Bank is to move the greatest amount of money with the least amount of thought" ) and a clear mandate to provide markets for Northern based transnational corporations. Clearly, the Bank is ill-suited to environmentally sustainable development.

Ultimately, the lessons that the international community learns from the mistakes made on the road to CFC phaseout may lead to the conclusion that implementing agencies such as the Bank are unnecessary and counterproductive. In the meantime though, there are a series of policies that the Bank could adopt that would greatly improve its performance as an implementing agency of the Multilateral Fund. Specifically:

The Bank has resisted suggestions such as these in the past, noting that its roleis not to determine technology choices for developing countries, but rather to objectively present all the options and allow the country to make the choice. The problem with this, of course, is that Bank officials hardly act as objective, impartial assessors of technology.

The Montreal Protocol is all about the destructive impact of modern technology on our global environment. Its negotiation and passage was made possible by the collective realization of the public, governments, and industry that where the long term health of the planet was concerned, a precautionary course was the wisest one. Industry representatives and Bank officials that advocate the continued use of environmentally damaging substances have lost sight of this fact. Ultimately, if the Protocol is to be judged as a success, the Bank and others must meet the challenge of charting a new future - one in which technology and development proceed in a way that is the least environmentally destructive, and the most socially just.

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Greenpeace is an independent campaigning organization which uses non-violent, creative confrontation to expose global environmental problems and to force solutions which are essential to a green and peaceful future. This publication has been made possible by the over 5 million Greenpeace supporters around the world.
Originally printed on totally chlorine free paper.

© Greenpeace September, 1994