Report No.: 102266
Project Name
HCFC Phaseout Project
East Asia and Pacific Region
Other Industry (90%); Central Government Administration (10%)
Pollution management and environmental Health (50%); Environmental
Policies and Institutions
Lending Instrument
Project ID
Republic of the Philippines
Implementing Agency
Department of Environment and Natural Resources
Environmental Category
Date PID Prepared
June 22, 2015
Estimated Date of Board
December 16, 2015
Initiation Note Review
July 7, 2015
I. Introduction and Context
Hydro-chlorofluorocarbons (HCFCs) are ozone-depleting substances (ODS) subject to
consumption and production control measures of the Montreal Protocol on substances that deplete the
Ozone Layer. They are mainly used as refrigerants in refrigeration and air-conditioning equipment and as
blowing agents for insulation foam.
HCFCs are also very potent greenhouse gases, and consequently have an impact on both ozone
depletion and climate change. The phase-out of HCFCs usually presents an opportunity to reduce direct
and indirect greenhouse gas (GHG) emissions through the use of low Global Warming Potential (GWP)
alternatives and the installation of more energy efficient equipment, thereby leading to multiple benefits
to the climate.
As a signatory of the Montreal Protocol, the Philippines is obligated to undertake a gradual phase
out of hydro-chlorofluorocarbons (HCFCs) between 2013 and 2040. This entails meeting reduction
targets from its baseline (2009-2010 average) consumption of 162.87 ODP tons. To reduce its
consumption to the baseline level in 2013 and 90% of the baseline level in 2015, the Philippines agreed
with the Executive Committee of the Multilateral Fund to phase out all the consumption of HCFC-141b
(40 ODP tons) in the foam sector and 5 ODP tons in the service sector from its 2011 level through
implementation of the Stage I HCFC Phase-out Project which is currently being implemented by UNIDO
and UNEP.
The goal of this project is to reduce its HCFC consumption to 65% of the baseline level or
105.87 ODP tons by January 1, 2020 in line with its obligations under the Montreal Protocol.
Country Context
According to the latest official data reported by the Philippines, the total HCFC consumption in
2013 was 136.69 ODP tons, which is well under the Montreal Protocol’s maximum allowable
consumption level of 146.58 ODP tons in 2015. To achieve the next obligation, a reduction of at least
30.82 ODP tons should be addressed by this proposed Project.
The Philippines does not produce any HCFCs. Demand of HCFCs is met through imports. In
2013, more than 2,100 MT of HCFCs were imported. Preliminary import data shows a slight increase
of HCFC imports to more than 2,400 MT of HCFCs in 2014. However, consumption of HCFC-141b
MT decreased from 408.67 MT in 2013 to 390.64 MT in 2014 attributed to the efforts of the on-going
Stage I HCFC Phase-out Project which focuses on phasing out HCFC-141b in the foam sector.
Sectoral and Institutional Context
The Philippines National HCFC Phase-out Management Plan prepared in 2011 reveals that
HCFC use in ODP tons was somewhat equally distributed in the manufacturing and servicing sectors.
The manufacturing sector includes refrigeration and air-conditioning manufacturers, foam producers,
electronic and metal processing, and fire protection industries. For the service sector, HCFC is used for
service and maintenance of air-conditioning and refrigeration equipment. Since the on-going Stage I
HCFC Phase-out Project will completely eliminate the use of HCFC in the foam sector by end of 2015,
the proposed Project will focus its phase-out activities in other manufacturing sectors with priority given
to refrigeration and air-conditioner manufacturers.
The Department of the Environment and Natural Resources (DENR) is empowered by the
Government of the Philippines as an executing agency for the implementation of the Montreal Protocol.
The Environment Management Bureau (EMB) of DENR is assigned as the national coordinator for the
implementation of the Montreal Protocol. Through the DENR-EMB, the Philippine Ozone Desk (POD)
was established to serve as a focal point whose main responsibility is the control and monitoring of
imports and export of all ozone depleting substances. The POD is financially supported by the MLF
through UNEP. In addition, a Project Management Unit (PMU), established to facilitate and coordinate
ODS phase-out activities under the Stage I HCFC Phase-out Project, is also financed by the MLF
through UNEP.
Relationship to CAS
The Country Partnership Strategy for the Republic of the Philippines for the period FY2015 –
2018 lays out the World Bank Group’s program and development solutions to promote inclusive growth,
reduce poverty and support shared prosperity in five engagement areas. The development objectives of
the proposed Stage II HCFC Phase-out Project are specifically linked to “Engagement Area 4 –
Resilience to Climate Change, Environment and Disaster Risk Management”.
The proposed project will focus on elimination of HCFC use in the refrigeration and airconditioning manufacturing industry by introducing an alternative refrigerant which not only has low
global warming effect but will also improve the energy efficiency performance of these products.
Therefore, the proposed project will transform refrigeration and air-conditioning markets in the
Philippines to higher energy efficient products and with low global warming refrigerants.
II. Proposed Development Objective(s)
Proposed Global Environmental Objective(s)
The project development objective is to reduce the HCFC consumption in the air conditioning
and refrigeration manufacturing sectors in compliance with the Philippines’ obligation under the
Montreal Protocol.
Key Results
The HCFC consumption will be limited to the level not exceeding 146.58 ODP tons during 2016
– 2019 and 105.87 ODP tons from 2020 – 2024. Carbon dioxide (CO2) emission reduction from the use
of lower GWP alternatives and the amount of ODP reduction will be captured through result indicators.
III. Preliminary Description
Concept Description
The proposed project can be considered as a continuation of the Philippines ODS Project as it
will build on the infrastructure and capacity established under the ODS project (i.e., POD, PMU, and
Land Bank – the financial agent of the previous ODS project) to deliver the required assistance to
beneficiaries and stakeholders primarily in the sectors similar to the previous ODS Project. The
proposed project is designed to address a specific reduction target (i.e., 2020 35% HCFC consumption
reduction target) in accordance with the agreed phase out schedule with the Multilateral Fund rather than
a project that would encompass multiple reduction targets and complete HCFC phase-out. The project
implementation period will be about 5 – 6 years.
The project will provide technical and financial assistance to eligible manufacturers, primarily in
the refrigeration and air-conditioning sectors, to redesign their products and retrofit their manufacturing
processes in order to adopt non-ozone depleting and low global warming technologies. The project will
also finance technology transfer that may be required by the beneficiary enterprises. To ensure
sustainability of HCFC phase-out and to transform the markets to non-ozone depleting and low global
warming technologies, technical assistance to strengthen monitoring and enforcement capacity and to
revise relevant safety and energy efficiency standards, will be provided to relevant government agencies,
non-government agencies, and standard bodies and/or agencies. The project will also build capacity in
the service industry by providing training on the maintenance and servicing of equipment using the new
A. Description
Component 1: Investment in HCFC Consumption Reductions (US$2.3 million)
The project will finance conversion of manufacturing facilities from HCFC technologies to nonozone depleting and low global warming technologies. While facilities using HCFCs are commercial
refrigerator, air-conditioner, electronics, metal processing, fire-fighting equipment manufacturers, the
project will give priority to HCFC phase-out in the refrigeration and air-conditioning manufacturing
sectors as these sectors consume the largest percentage of the annual HCFC consumption in the
manufacturing sector and early HCFC phase-out in these manufacturing sectors will reduce the build-up
of HCFC equipment installation in the country and future demand of HCFC for servicing this equipment.
To eliminate the use of HCFC in the refrigeration and air-conditioning manufacturing processes,
low GWP alternatives such as R-290 (propane), HFC-32, and others (if any) will be considered.
Selection of alternatives will take into account safety, performance, and climate impact.
Based on the survey conducted in 2011, there are about 21 air-conditioner manufacturers and 8
commercial refrigerator manufacturers in the Philippines. A few of them may not be eligible as they are
100% owned by foreign enterprises from developed countries. Eligibility of the air-conditioner and
commercial refrigerator manufacturers will be confirmed during appraisal. For eligible enterprises, the
project would finance replacement or retrofit of product design and testing, acquisition of manufacturing
equipment including new refrigerant leak detectors, vacuum pumps, refrigerant storages, refrigerant
charging units, refrigerant transfer pumps and piping, pressure gauges, refrigerant recovery and recycling
machines, brazing machines and air booster compressors, safety devices, and others.
Component 2: Technical Assistance (US$0.5 million)
The objectives of the technical assistance component are to expedite transfer of manufacturing
technology of R-290 and/or HFC-32 refrigeration and air-conditioning technologies, and to ensure safe
use and handling of new products. Depending on the final choice(s) of technologies, technical study
tours and technical workshops on the design and manufacturing of R-290 and HFC-32 equipment will be
financed. Other technical assistance activities could include revisions of appliance standards, building
codes, modifications of energy efficiency and safety laboratories, technical training for new and on-thejob refrigeration and air-conditioning technicians involved in manufacturing, installation and services of
new alternative products.
Component 3: Project Management (US$0.2 million)
The project will continue to finance the PMU that has been established within DENR-EMB by
the previous ODS project and is currently implementing the Stage I HCFC Phase-out Project financed by
UNEP. Assessment of the PMU’s role and responsibility will be conducted. A review and
restructuring of the PMU is anticipated in order to ensure that the roles and responsibilities of the PMU
are compatible with the new business needs. The project will explore reengagement of the Land Bank
of the Philippines (LBP) as a financial agent of the Project.
The project will finance technical assistance to EMB-PMU and LBP, if applicable, for
managing, supervising, monitoring and reporting on the implementation of Components 1 and 2 of the
Project. It will also finance technical assistance to EMB-PMU for the development of sector-specific
regulations and policy, such as, inter alia, rules governing HCFC imports and exports, and the ban on the
use of HCFC in air-conditioners and refrigerators.
IV. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the Project
Environmental Assessment OP/BP 4.01
Natural Habitats OP/BP 4.04
Forests OP/BP 4.36
Pest Management OP 4.09
Physical Cultural Resources OP/BP 4.11
Indigenous Peoples OP/BP 4.10
Involuntary Resettlement OP/BP 4.12
Safety of Dams OP/BP 4.37
Projects on International Waterways OP/BP 7.50
Projects in Disputed Areas OP/BP 7.60
V. Financing (in USD Million)
Total Project Cost:
Financing Gap:
Financing Source
Total Bank Financing:
OTF Grant (Montreal Protocol)
VI. Contact point
World Bank
Viraj Vithoontien
Senior Environmental Specialist
Republic of the Philippines
Cesar Purisima
Secretary of Finance
632 523-9220
Implementing Agencies
Department of Environment and Natural Resources
Contact: Atty. Analiza Rebuelta-The
632 925-8277
VII. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500