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Five Things You Should Know About Ozone Depleting Substances in California's Cap-and-trade Program

12/04/2012 01:58 pm ET | Updated Feb 03, 2013

California's cap-and-trade program incorporates the use of carbon offsets generated from the destruction of ozone depleting substances (ODS) to help the state meet its goals for reducing greenhouse gas emissions. While you may not be familiar with the term ozone depleting substances, chances are that these substances can be found in your home and business. ODS are used in a wide variety of commercial and residential refrigerators, air conditioning units, and building insulation.

ODS destroy the stratospheric ozone layer when released into the atmosphere. In addition to their potency in burning a hole in the earth's protective ozone layer, certain ODS are also significant greenhouse gases with high global warming potential (GWP), meaning they are extremely potent at trapping heat in the atmosphere. The GWP of ODS can be several hundred to several thousand times more potent than carbon dioxide.

While many ODS have been banned from production, they have not been banned from being reused in older equipment after being reclaimed. Leakage of existing ODS during reclamation and in older equipment is both a serious climate concern and a serious threat to the earth's protective ozone layer.

California's standard -- or protocol -- for ODS offsets provides a rigorous methodology and a financial incentive for the destruction of ODS gases, specifically certain chlorofluorocarbons and hydrochlorofluorocarbons. Here are five things you should know about ODS in California's cap-and-trade program:

  1. These gases are not required by law to be destroyed and, therefore, are often reused.

    In 1987, global leaders came together to address the thinning of the ozone layer in the earth's stratosphere and adopted the Montreal Protocol on Substances that Deplete the Ozone Layer, an international treaty that provides a global framework for phasing out the production of substances responsible for ozone depletion. To date, 197 nations -- almost every country in the world -- ratified the treaty to reduce and eventually eliminate the production and use of ODS. The United States ratified the treaty and incorporated the rapid production phase-out schedule for developed nations.

    However, the Montreal Protocol does not require the destruction of existing stocks of ODS, and so ODS produced prior to phase-out may legally be recovered, recycled, reclaimed, and reused indefinitely in the U.S. refrigerant market until they have all leaked into the atmosphere. The destruction of ODS is not common practice in the U.S. and large quantities of existing stocks are available in old refrigeration systems, air conditioning units, building infrastructure and unused stockpiles. Reclaimed ODS are often reused to service older equipment that have high leak rates; some equipment may release ODS to the atmosphere at rates of up to 35 percent per year.

  • The ODS protocol specifically excludes newly produced gases.

  • The California Compliance Offset Protocol for ODS Projects and the Climate Action Reserve's U.S. ODS Project Protocol, on which it was based, only issue offset credits for the destruction of existing stockpiles of gases that are prohibited from new production under the Montreal Protocol. They specifically exclude gases that are still being produced or that are not covered by the Montreal Protocol.

    In comparison, the UN's Clean Development Mechanism (CDM) offset program provides credit for the destruction of newly produced HFC-23 gases. This has created a perverse incentive to produce more HCFC-22 gas in order to destroy the HFC-23 byproduct for credit. HFC-23 is not an ozone-depleting substance and is not eligible under the California or Reserve ODS protocol. HCFC-22 coolant also is not eligible under the ODS protocols.

    By only allowing ODS that have been phased out of production, California's offset program is safeguarded from gaming of the system.

  • Only gases sourced and destroyed in the U.S. at highly regulated and permitted facilities are eligible.

  • Under California's cap-and-trade program, the ODS must be destroyed at U.S. facilities that meet the U.S. EPA's very strict permit and operating requirements to protect the environment.

    Also, California's cap-and-trade program restricts eligibility to ODS sourced from and destroyed in the U.S. Such a restriction ensures very strict and efficient quality control, monitoring and verification.

  • Strict documentation requirements are enforced.

  • The ODS protocol has very strict documentation requirements to demonstrate full and complete chain of custody of the ODS from point of origin to destruction (so called "cradle to grave" records). ODS projects must also provide detailed documentation of data collection, sample analyses, chemical composition, and operating procedures.

  • The destruction of ozone depleting substances has already achieved significant emissions reductions.

  • U.S. ODS projects registered in the Climate Action Reserve have already achieved nearly five million metric tons of carbon dioxide equivalent emissions reductions, the equivalent of taking nearly one million passenger vehicles off the road for one year. These carbon credits are eligible for conversion to early action offset credits for use in California's compliance program. So that old refrigerator you recycled through your local utility or local Sears may be playing an important role in fighting climate change. ODS chemicals from your old appliances are recovered in a safe manner at disposal facilities, and offset programs incentivize the destruction of these chemicals, preventing the gases from escaping and damaging the environment.

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    At an appliance recycling center, ODS is captured from old refrigerators for destruction.

    Using market incentives for ODS destruction is more efficient and effective than alternatives, such as a mandate. Attempts to mandate destruction of ODS have had limited success because of difficulties in monitoring widely dispersed collection activities and difficulties enforcing penalties for illegal releases. With many millions of refrigerators, buildings, and other equipment containing ODS, monitoring disposal of the refrigerants and foam blowing agents is difficult. By incentivizing their destruction, California is ensuring the permanent removal of these destructive gases from continued leakage, thereby protecting the ozone layer and helping address global climate change.