March 23, 2013 Prime Minister Shinzō Abe Sōri Daijin Kantei 2-3-1 Nagata-chō Chiyoda-ku Tokyo 100-8968 Re: Ban HFC-23 Carbon Offsets in Japan’s Bilateral Offset Control Mechanism (BOCM) Dear Mr. Prime Minister: The Environmental Investigation Agency (EIA), requests the Government of Japan to join the European Union, Australia, and New Zealand in declaring that they will not use, or allow Japanese companies to use, carbon offsets from the destruction of HFC-23 to meet greenhouse gas mitigation pledges aimed at combating climate change. Additionally, EIA urges the Japanese Government to exclude projects involving the destruction of HFC-23 in the Bilateral Offset Credit Mechanism (BOCM). EIA is an international non-profit actively working to promote a phase-out of hydrofluorocarbons (HFCs) through the Montreal Protocol. In tandem with this work, EIA has exposed the fraudulent nature of HFC-23 crediting under the Clean Development Mechanism to the Kyoto Protocol (CDM). HFC-23 is a by-product in the manufacture of refrigerant HCFC-22, and is a significant contributor to climate change because of its incredibly high Global Warming Potential (GWP) of 14,800.1 The producers of HCFC-22 have made billions of dollars worth of profits destroying HFC-23 because the cost to destroy HFC-23 is a fraction of the value of the CDM credits. In fact, the Chinese government assessed a 65% tax on the enormous revenues from these CDM credits. Additionally, an investigation into the practices of the CDM-approved fluorinated gas plants demonstrated that many of these plants artificially inflated the HFC-23 by-product ratio in order to collect more credits, and then stopped production or lowered the ratio when they reached their crediting limit. Since plants are basing production on the crediting limits and not on demand for HCFC-22, there has been an overproduction of HCFC-22, a harmful ozone depleting substance with a GWP of 1810. It is because of such types of practices that HFC-23 destruction credits have become “toxic” and representative of the misuse of the carbon markets. In developed countries, all fluorinated gas producers destroy HFC-23 as a cost of producing HCFC-22. Despite this, proposals have been made at the Montreal Protocol to pay all of the incremental costs of destroying HFC-23 in developing countries. The major beneficiaries of the CDM crediting have rejected these proposals outright, even though many HCFC-22 lines are becoming unprofitable without the payments of HFC-23 crediting and simply should be closed down. Although EIA strongly appreciates the Government of Japan’s support for the North American Proposal to the Montreal Protocol to phase down production and consumption of HFCs, we are aware that Japan has formally supported efforts to capture and destroy HFC-23 by companies in China, India and Mexico. ENVIRONMENTAL INVESTIGATION AGENCY P.O. BOX 53343 Washington DC, 20009 TEL +1 202 483 6621 FAX +1 202 986 8626 www.eia-global.org info@eia-global.org
We request Japan to join the European Union and other nations that have announced an end to any further investments in HFC-23 credits starting 2013. EIA respectfully appeals to the Government of Japan to publicly announce that it will no longer support further investments in HFC-23 destruction either under the CDM program or under Japan’s national BOCM. The decision your Government makes now will impact the mitigation of greenhouse gases far beyond Japan. If Japan creates a market for HFC-23 destruction credits, it will cause other fluorinated gas producers to try to receive money under the BOCM or to continue venting HFC-23 in hopes that some other country will pay them for the destruction of this super greenhouse gas. Venting of their HFC-23 by all the plants could mean emissions of 1.5 billion tonnes of CO2 equivalent into the atmosphere by 2020. With the crash of the carbon market, there is the opportunity to remove excess HCFC-22 manufacturing capacity and get the remainder of the HFC-23 destroyed at either a reasonable incremental cost or as a cost of doing business. We urge you not to miss this opportunity and not to aid the continuation of the HFC-23 scandal as you craft the BOCM. Thank you for your prompt attention to this matter. Sincerely,
Alexander von Bismarck Executive Director
ENVIRONMENTAL INVESTIGATION AGENCY