Effective, but how fair?
ANIL K. AGARWAL,
in a personal view, outlines the successes, strengths and shortcomings of the Montreal Protocol from an Indian perspective
The environment took centre stage in India's national agenda in the aftermath of the Bhopal tragedy. An all encompassing Environment (Protection) Act was enacted in 1986. The Supreme Court has recently taken a leading role at the initiative of a few activist non-governmental organizations, largely over air and water pollution.
Protecting the ozone layer, however, remains a low social priority - though it has not remained untouched by these activities - and India's stand on Montreal Protocol issues should be seen in that context. It can take some credit for persuading the international community to incorporate specific provisions on financial assistance and technology transfer in the Protocol through the London Amendment.
The Montreal Protocol is a success story which can be measured by looking at the figures on consumption of ozone-depleting substances (ODS). The developed countries were consuming about 1.3 million tonnes of ozone-depleting potential in 1986. In the absence of the Protocol, demand in India and China was projected to be about 500,000 tonnes in the year 2010. Now the use of ODS has been eliminated in developed countries except in a few essential uses and process agents and when recovered and reclaimed. India's consumption has remained reasonably static for the last four years. Current overall consumption in developing countries is likely to be less than 200,000 tonnes per year, and can only fall in future.
Cooperation between developed and developing countries has been another tremendous success. In the Protocol's initial years there was much mistrust between the two sides. Discussions were sometimes acrimonious, and there were attempts to isolate individual countries. Rumours persisted throughout 1995 that funds were limited and there might be no replenishment the following year. The 1996 replenishment not only put these to rest but opened an era of greater cooperation. Trust is replacing mistrust. Engagement is replacing attempts at isolation. The spirit of the discussions is changing from political negotiation to technical dialogue. Each side better appreciates the other's potentials and limitations. The Protocol has demonstrated that the international community can work together.
There have been recent criticisms about slowness in implementing approved projects but this must be assessed against the enormity of the task. Very many institutions are involved. Between the two ends of the spectrum - occupied by the Executive Committee and the suppliers of equipment - are, among others, the Fund Secretariat; the implementing agencies - the World Bank, the United Nations Development Programme (UNDP), UNEP and the United Nations Industrial Development Organization (UNIDO); different departments of national governments and their review processes; UNDP field offices; local finance intermediaries; and enterprises. All their procedures have to mesh and the individuals working in them have to cooperate before progress can be made. It is remarkable that so many institutions and individuals have succeeded in coming together to implement approved projects. The speed of the process should not be judged harshly, though every effort must be made to implement these projects expeditiously.
There are, however, also underachievements of the Protocol. One shortcoming has been the national Ozone Offices' lack of ownership of the ODS phase-out programme. This depends heavily on implementing agencies and their consultants, a problem that started with the preparation of Country Programmes and was accentuated by the procedures of United Nations meetings and the language of United Nations documents. Competition between developing countries for the Multilateral Fund's (MLF) resources and constant pressure to speed up the phase-out left the Ozone Offices with few choices. Resources made available for supporting an administrative unit within government were seen as the beginning and end of capacity-building. Very little effort was made to train Ozone Officers and their high turnover was ignored. The 'Networks' - important in improving ownership by Ozone Offices - faced tremendous initial resistance.
The process of project review has gone through a difficult period. There is a feeling that reductions in project budgets have often been arbitrary. It is a poor defence that these were agreed by the country and the concerned implementing agency. Enterprises are subject to market dynamics and often find that, having submitted a project, they have no option but to accept whatever is given. The credibility of the system has suffered.
Why does the process of project review have to be political rather than technical? Why has each project got to be negotiated? The Executive Committee's emphasis on policy decisions, rather than a case-by-case approach, has improved the situation, but the last word on the issue is yet to be heard or written.
Is the Protocol following the polluter-pays principle? The question needs more thorough study, but there was inequity from the start. First, the Indicative List defines the categories of costs funded by the MLF but leaves the issue of savings open-ended. As it stands, any savings from conversion to non-ODS technologies are to be deducted. Second, technology upgrade is deducted, while technology downgrade is not compensated. Third, there is no compensation for production lost through phasing in non-ODS technologies. Fourth, the duration of incremental operating costs is short when costs are to be paid, but long when savings are to be deducted. And finally, cost-effectiveness thresholds have become another means of limiting burdens on the MLF.
There is a feeling that the burden of the phase-out has partly shifted from the MLF to the developing countries and has contributed to some non-ODS-based products costing more than the ODS-based ones they replace.
India's unique ECO-FRIG project has enjoyed a high degree of trust and flexibility, given the Indian refrigeration industry very valuable experience and confidence in hydrocarbon technology, and produced great willingness to share knowledge and experience. Why cannot something similar be implemented under the MLF? Such projects are crucial to the success of any regime which involves conversion to more environmentally friendly technologies.
The Protocol's most important failure has concerned technology transfer. This has taken place when the technology came with the equipment - which has more to do with having the resources to buy equipment than with procuring the technology itself. The Protocol has fairly strong provisions on technology transfer, but even these have proved inadequate. The issue will be particularly focused regarding the transfer of technology for manufacturing medical inhalers which do not use CFCs. Enormous resources have been devoted to developing this new and patented technology and the innovators deserve compensation. But this should not involve closing production facilities in developing countries, or cause their patients to pay higher prices. The Montreal Protocol has to find a solution if it is to serve as a true model for global environmental cooperation.
Again, there is a growing feeling that new technologies will replace existing ones. This would take place largely in the North, and the South will have to bear the cost of subsequent conversions. The full implications are yet to be known, but the thought of technological dependence leaves a very uncomfortable feeling. Developing countries also have serious concerns about the role and impact of trade measures.
Developing countries are caught between environment and development. Information technology has increased their peoples' desire to attain levels of development similar to those in the North. The Northern path of development is unsustainable, but developing countries cannot slow down the process for environmental considerations. Environmentally friendly technologies will come largely from the developed countries which - having used the greater share of natural resources to date - will have to bear the cost of the South's adopting them.
Anil K. Agarwal is Director of the Ministry of Environment and Forests of the Government of India, and heads its Ozone Cell.