Announcement of The World Bank's First Montreal Protocol Grant Agreement to China to Protect the Ozone Layer on November 30, 1993

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 News Release No. 94S/33EAP Contact: Erin Burns (202)458-2210 External Affairs - EAPVP China Acts to Protect Ozone Layer Washington, D.C., November 30, 1993 -- The People's Republic of China today signed a grant agreement with the World Bank that will help finance the first phase of a national effort to eliminate the use of ozone depleting substances (ODS). The $6.92 million grant will support the introduction of non-ODS technology in five factories, preventing the use of about 16,000 tons of ODS each year. China is the developing world's largest consumer and producer of ODS, but in 1991 ratified the Montreal Protocol on Substances that Deplete the Ozone Layer, which commits countries to eliminate the use and consumption of ODS. Developed countries must meet this target by 1996, while developing countries have a grace period until 2010. China currently consumes about 50,000 tons of ODS each year and produces about 30,000 tons. Consumption of ODS has been growing at about 11 percent a year in China. This is the first Montreal Protocol grant to China. According to Mr. Shahid J. Burki, Director of the World Bank's China Country Department, "this grant establishes the foundation for a long-term program to provide China technical and financial support to meet its commitment to phase-out the use of ODS." The Montreal Protocol ODS Phase Out Project will introduce non-ODS technology that has been commercially successful outside of China to five factories in the aerosol, foam and fire protection sub-sectors. These sub-sectors account for almost two- thirds of China's ODS use and will be the focus of initial phase-out efforts because substitute technologies are widely available. Other sectors, including refrigeration and air-conditioning will be phased-out more slowly. Two aerosol factories in Shanghai and Tianjin will convert their operations from chloro-flouro-carbon (CFC) use to liquefied petroleum gas (LPG). Since LPG is not a halogenated substance, its use does not have a negative impact on the ozone layer. Adoption of LPG in these two instances will phase out the use of 12,600 tons of CFC-12, which does deplete the ozone layer. The Beijing Fire Fighting Equipment Factory will receive financing to import modem equipment and technology to produce 3,000 tons a year of ABC powder, which is an effective substitute for halon in fire-fighting. Most industrial countries use ABC powder, but previously China lacked the technology needed to do so. The ABC dry powder will be channeled to areas where halons were previously used, including the Zhejiang Fire Fighting Equipment Factory, which is China's largest manufacturer of Halon 1211 fire extinguishers. Grant financing to the Zhejiang factory will cover the cost of converting its operations to the production of ozone-safe ABC powder fire extinguishers. Finally, CFC-12 consumption at the Zhejiang Plastics Pilot Plant will be replaced with butane in the production of polystyrene and polyethylene. All five sub-projects will be coordinated by the National Environmental Protection Agency (NEPA), the Chinese agency responsible for the phase out of ODS nation-wide. The project is taking place within the broader context of a national policy framework to phase-out ODS. This agenda includes: * Production management. A permit and quota system to manage the production of ODS. The manufacture of ODS will also require Government permission which will be based on environmental impact assessments. * Appropriate pricing and taxation of ODS and ODS substitutes. * Incentives. The government will encourage investment policies that promote ozone protection, as well as the development of technologies for ozone protection applicable to China. * Public Awareness. Public media resources will be used to raise public awareness of ozone issues and "green labels" will be issued to products made with non-ODS and ODS substitutes. The Chinese Government China's ODS Phase-Out Schedule estimates that the national campaign to eliminate the use of ODS by 2010 will have a direct cost of about $1.4 billion. I Through 1996, China plans to keep ODS consumption at 1991 levels and then begin tapering it off, finally eliminating consumption of ODS in 2010. The $6.92 grant will be provided from the Montreal Protocol 1991 1996 2000 2005 2010 Multilateral Fund, established to help Year developing countries in their efforts to meet Montreal Protocol commitments. The Multilateral Fund is managed by an Executive Committee and implemented by the World Bank, the United Nations Development Program, the United Nations Environment Program, and the United Nations Industrial Development Organization. This is the largest grant awarded by the Multilateral Fund to date. Total grant assistance from the World Bank in this area now totals $19.1 million to 10 countries. Money figures are in U.S. dollar equivalent. -2-