Destruction of Waste Ozone Depleting Substances and Synthetic ...

Destruction of Waste
Ozone Depleting Substances and
Synthetic Greenhouse Gases Program
Comments on Consultation Paper
January 2013

Executive Summary
Australia is a world leader in international and domestic efforts to protect the ozone layer
and reduce synthetic greenhouse gasses. This has been achieved through the combined
efforts of the Australian Government and the refrigeration and air conditioning (RAC)
Industry.
Such a positive stance is critical to the economic well-being and public health of a nation
which is already predominantly arid and in close proximity to the ozone hole.
Australia’s ODS and SGG product stewardship scheme involves three key players:
Australian Government – which administers the import / manufacturing licence
Australian Refrigeration Council Ltd (ARC)– administers handling & storage licences
Refrigerant Reclaim Australia (RRA) – operates the reclaim and destruction facilities
These are interrelated and work in unison to have an effective impact on minimising
emissions of ODS and SGG’s – thereby having a real and positive impact on the environment.
The current system works. It works extremely well. Indeed it is widely viewed as a global
leader. Not only does it have a very real positive impact, it also provides Australia with
significant credibility on the global stage.
The Australian scheme is built around the notion of control. In contrast to economic matters,
issues such as public safety and environmental protection control are seen as the most
effective means of achieving good policy outcomes. The introduction of variables reduces
control and increases administration costs.
Introducing competition into an area prefaced on single-point control carries potential risk
and adds to the complexity of the scheme, resulting in confusion. These ‘macro’ issues should
be further explored as part of the consultation paper.
At a micro level potential issues such as reduced accountability, transparency and access to
valuable information as a result of ‘commercial – in – confidence should be considerations.
In general terms the ARC supports regulation for which there is a demonstrated need, net
benefit, is simple to implement at low cost and is both efficient and effective. These are
fundamental characteristics of good regulation.
ARC Submission on ODS&SGG Destruction Page 2

Introduction
Australia has been a leading supporter of international efforts to protect the ozone layer of
the atmosphere since the early 1980s when initial moves were made through the United
Nations to limit the global consumption of ozone depleting substances (ODS). When vented
into the atmosphere ODS damages the ozone layer which protects humans, animals, plants
and building materials from the harmful effects of UV-B radiation.
Australia has ratified the Vienna Convention for the Protection of the Ozone Layer 1985 and
the Montreal Protocol on Substances that Deplete the Ozone Layer 1987. It has also ratified
each of the amendments to the Protocol designed to extend international ozone protection
measures.
As the ozone layer protects the Earth from ultraviolet radiation, protecting Australia from this
radiation can effectively be achieved by implementing mechanisms that minimise the use of
substances that are known to deplete the ozone layer. Currently, minimising the use of ozone
depleting substances is approached in two ways:
1. through the implementation of domestic policies that minimise the domestic emission of
ozone depleting substances; and
2. by encouraging all countries to minimise emissions of ODS through participation in
Protocol forums.
On the domestic front there exists a product stewardship program by virtue of the Ozone
Protection and Synthetic Greenhouse Gas Management Act 1989. This scheme broadly
involves three key components:
1. Import Licences administered by the Australian Government.
2. A licence scheme regarding the use, handling and storage of refrigerants –
administered on behalf of the Australian Government by the Australian Refrigeration
Council Ltd.
3. Destruction of waste ODS and SGG refrigerants by Refrigerant Reclaim Australia.
The three controls work in unison to minimise the emissions of refrigerants thereby protecting
the environment. In many quarters the Australian system is seem as world leading best
practice. This is particularly so of RRA.
Existing Regulatory Arrangements - Australia
The Ozone Protection and Synthetic Greenhouse Gas Management Act 1989:
prohibits the import, export or manufacture of chlorofluorocarbons, halons, carbon
tetrachloride, methyl chloroform and hydrobromofluorocarbons without an essential-uses
or used-substances licence;
establishes a system of controlled-substances licences and reporting requirements for the
import, export or manufacture of hydrochlorofluorocarbons and methyl bromide
consistent with Australia's obligations under the Montreal Protocol;
establishes an Ozone Protection Reserve to allow revenue from the licensing system to be
directed towards the cost of its administration, and industry awareness programmes for
the phase out of hydrochlorofluorocarbons and methyl bromide; and
various administrative requirements (such as fees for licences) set under the Ozone
Protection and Synthetic Greenhouse Gas Regulations 1995 No. 389.
ARC Submission on ODS&SGG Destruction Page 3

Control vs Competition
Commercialisation of the ODS and SGG destruction process currently successfully operated
by RRA by opening it up to competition is not without risk.
Historically the Australian scheme has been about control. Controlling refrigerant such that it
is not emitted into the atmosphere causing significant environmental damage.
It is worth remembering that Australia has a great deal to lose economically and in terms of
public health should emissions increase – given our proximity to the hole in the ozone layer
and given we are fundamentally already an arid land. Hence the focus on control is
warranted.
In essence critical policy issues such as public safety and environmental protection occupy a
similar policy space, both essentially being about control. It is critical in areas such as these
that commercial interests be stringently regulated to avoid a ‘race to the bottom’ in terms of
price and quality standards.
Control and competition are fundamentally juxtaposed.
There is no question adequate control becomes much more difficult with multiple operatives
– both in an administrative and operational sense. It introduces the potential for variability
and in a commercial environment where the drive for market share can result in a ‘race to
the bottom’, with quality standards suffering.
At a micro level potential issues such as reduced accountability, transparency and access to
valuable information to both industry and used by Government to inform future policy may
suffer as a result of ‘commercial – in – confidence’. These should be considerations.
The current destruction arrangements through the single point of RRA have significant
Industry currency and credibility, and is simple and well understood by Industry. Changing
this is likely to add complexity and confusion for Industry.
The Australian Refrigeration Council Ltd
The Australian Refrigeration Council (ARC) is at the forefront of environmental best practice –
we have a very real impact on minimising avoidable emissions into the atmosphere of ozone
depleting substances and synthetic greenhouse gasses.
The ARC administers various important end-use controls in the reduction of global warming
and ozone depletion and increasing energy efficiency. We make a positive difference to the
quality of the environment.
The Australian Refrigeration Council is a private company limited by guarantee. The Board is
representative of the Refrigeration and Air Conditioning Industry and, in partnership with staff,
provide a unique perspective and ability to respond to complex issues.
In achieving its objectives the ARC works in partnership with national governments and with
various stakeholders including key Industry bodies, licensed individuals, manufacturers and
businesses.
ARC Vision - A better quality environment
ARC Mission - To reduce direct and indirect greenhouse gas and ozone depleting substance
emissions through licensing, compliance and education
Through the administration of the Australian Government’s Ozone Depleting Substance
(ODS) and Synthetic Greenhouse Gasses (SGG) licensing scheme, the ARC has a very real
and positive impact on the environment.
ARC Submission on ODS&SGG Destruction Page 4

The ARC administers the scheme with expertise, innovation and environmental and business
acumen.
ARC has fifteen affiliated Industry bodies, representing the various sub-sectors of the
Refrigeration and Air conditioning industry.
Appliance Industry Association (AIA)
Australian Institute of Refrigeration Air Conditioning & Heating (AIRAH)
Air Conditioning & Mechanical Contractors Association (AMCA)
Air Conditioning & Refrigeration Equipment Manufacturers Association (AREMA)
Air Conditioning & Refrigeration Wholesalers Association (ARWA)
Federation of Automotive Products Manufacturers (FAPM)
Institute of Automotive Mechanical Engineers (IAME)
Institute of Refrigeration & Air Conditioning Service Engineers (IRASE)
Motor Trades Association of Australia (MTAA)
National Electrical & Communication Association (NECA)
Refrigerants Australia (RA)
Refrigeration & Air Conditioning Contractors Association (RACCA)
Refrigerant Reclaim Australia (RRA)
Victorian Automotive Chamber of Commerce (VACC)
Vehicle Air Conditioning Specialists Association (VASA)
The inclusion of RRA as a member of ARC is of critical importance, providing for cross
organisational dialogue and maintenance of the quality across two critical elements of the
Australian product stewardship program. Opening this up to market forces will reduce the
effectiveness of this relationship.
Options
The consultation paper unfortunately ignores the fundamental question of if the recovery
and destruction of ODS and SGG refrigerants should be opened up to market competition,
preferring instead to jump to options which are pro – competition.
This ignores the many risks in moving to the open market whilst disregarding the success of
the current scheme. In short it fails the fundamental test of good regulation of demonstrating
‘market failure’. In the view of the ARC these factors need to be further explored.
Notwithstanding this there are some poignant issues that flow from the paper worth further
consideration:
Financial incentives to encourage reclamation and destruction are to be applauded
notwithstanding that any such incentives should be managed with the current,
successful scheme by increasing the rebate on returned refrigerant.
Additional enforcement should be mandated in order to improve levels of
compliance with a consequent increase in the level of recovery – ultimately reducing
emissions.
Additional regulation and enforcement of end of life products and equipment.
The ARC would be happy to explore additional enforcement options further.
In general terms the ARC supports regulation for which there is a demonstrated need, net
benefit, is simple to implement at low cost and is both efficient and effective. These are
fundamental characteristics of good regulation.
ARC Submission on ODS&SGG Destruction Page 5