The estimated full costs of implementation are 121 Mio €, whereby 9 Mio € will be necessary to initiate the NAMA process (support needed). This amount will then be matched with national co-funding, which is 112 Mio EUR (leverage 12 fold).

The costs are needed to reach the following outputs:

Output 1: Policy framework for the transformation of the domestic refrigeration sector is established
Output 2: Producer are designing and producing climate friendly energy efficient refrigerators
Output 3: New for old replacement programme is established.
Output 4: Old fridges are returned and processed in a recycling scheme
Output 5: Cross sectoral capacity building.

To reach output 1, the amount of 1.8 Mio € will be necessary (0.75 Mio € support needed; 1 Mio € national co-funding), 22 Mio will be needed to reach output 2 and 4 (ca. 4.75 Mio € support needed, 17 Mio € national co-funding) and 98 Mio € for output 3 (3.5 Mio € support needed, 94 Mio national co-funding.

Here, the incremental costs refer to the conversion of the production lines (output 2) and the replacement programme (output 3). Indeed the incremental costs per fridge (HFC-134a unit vs R-600a) are given with ca. 60 € per fridge. However, this needs prior conversion of the existing production lines and the set-up of a functioning replacement programme, so that the green fridges will enter the market.

Production line conversion

The conversion of the production lines to produce environmental friendly and energy efficient green fridges has been calculated with 14.5 Mio €. 11 Mio € in loans are disbursed to manufacturers for production line conversions. The necessary NAMA support is 2.8 Mio € as concessional loan contributions for converting the production lines; the manufacturers will have own investments of 2 Mio €. With the concessional loans, the manufactures are able to cover high investment costs associated with the production line conversions.

Replacement programme

The costs of the replacement programme amount to 98 Mio €. Green new refrigerators are made available to low income households with an on bill financing scheme, i.e. end-users make repayments via the electricity bill. The mechanism has already been established for other Colombian products and shown to be particularly suitable for low-income households. Additional incentives increase the attractiveness for end-user. During the NAMA support project, 90 Mio € will be disbursed through the on bill financing scheme, with commercial banks cooperating with utilities, partially using established structures such as the “Easy credit line”. There is particular interest from COLPATRIA/CODENSA to offer consumer credits for green fridges.

The table below shows the different financial cost components. The largest part (point 3) is used so that Bancoldex and CAF can provide concessional loans for manufactures to convert their production lines. The second largest component (point 4) is used to seed fund the Green Replacement Fund, buffering the risk that end-user credits are not paid back. With this, consumer credits can be offered to a broader spectrum by of low-income households

The table below shows the different technological cost components. The largest part (point 1) is used for the assignment of experts and advisory services. This includes the following:

 - Technical assistance for new, alternative technologies

- Strengthening management systems/ institutional strengthening (policy)

- Training for e-waste manager

- Awareness/ outreach/ Workshops

The total emissions of a domestic refrigerator over its life time are 9.3 t CO2eq (CFC-fridge), 6.6 t CO2eq (HFC-fridge) and 3.2 t CO2eq (green R-600a fridge).

Placing one green fridge on the market instead of an HFC-fridge (currently produced) will reduce emissions by 3.35 t CO2eq over a life time (assuming life time of 20 years), which corresponds to 0.17 t CO2eq per year.

Converting the entire sector to R-600a units, all HFC units that are currently sold in Colombia will be replaced, resulting in emission of 0.79 Mt CO2eq within the project period of 5 years and 15.7 Mt CO2eq accounting for the entire life cycle.

Over the next 10 years (beyond NAMA support phase), selling green fridges will result in 36.8 Mt CO2eq (over life time of equipment). After the NAMA support phase only green fridges will be available in the country, low-income households will further benefit from attractive consumer credits.

The proper waste management of old CFC containing fridges will reduce emissions by 3.77 t CO2eq per fridge. With the target to process 300,000 fridges within the NSP period, there are emission savings of 1.1 Mt CO2eq

Processing all CFC fridges (beyond NAMA support phase) will result in 4.7 Mt CO₂eq emission savings.

Summary:

-         Placing green fridges on the market: 15.7 Mt CO₂eq emission savings within the NAMA support phase

-         Proper recycling of old fridges: 1.1 Mt CO₂eq emission savings within the NAMA support phase

-         Total emission savings within NSP: 16.8 Mt CO₂eq
-       Long-term emission savings projection: 3.8 Mt CO₂eq per year by 2030

Social development

- Employment and education (high): Training and education enables managers, engineers, technicians and servicing personnel in the domestic refrigeration sector to stay up-to-date and work in accordance with international trends, regulations and standards. Certified training increases the chances of proper employment and a better income;

- Health (medium): Reliable cooling ensures safe food for the low-income households. Proper waste management of EOL equipment will reduce health risks;

- Low-income household energy costs that are associated with the energy consumption of domestic refrigerators are reduced by 50% (after repayment time).

Economic development

- Qualification and certification of local technicians (high): Creation of employment and skilled set of technicians through training measures (production, service and financial support sector);

- Raise sustainable competitiveness of producers (high);

- Reduced national expenditures for energy subsidies (reduced energy consumption due to higher efficiency) which can be used to promote green fridges and proper waste management;

- Availability allows for CSR (green brands) (medium);

- Low-income household energy costs that are associated with the energy consumption of domestic refrigerators are reduced by 50% (after repayment time)

- National savings on energy (high);

- The purchase of hydrocarbon refrigerants is cheaper than the purchase of HFC-refrigerants.

- Production and availability (medium): The production of natural refrigerants is less costly and consumes far less energy than the production of synthetic refrigerants. The handling of natural substances cannot be restricted by patents, so they can be processed and sold by any company in any country locally.

Environmental protection

- Emission reduction (medium): Using natural refrigerants reduces direct emissions of HFC, which harm the climate. Highly efficient refrigerators based on natural refrigerants have lower energy consumption and therefore reduce indirect emission (energy supply);

- Preservation of valuable raw materials (medium): unlike fluorinated substances which are produced from fluorspar, natural refrigerants do not deplete resources;

- Less pollution and toxic waste (high): Natural refrigerants do not produce persistent wastes in the atmosphere;

- Less food waste through better cooling.

National benefits

- Colombia to gain international recognition for setting the pace as best practice example to act on the domestic refrigeration sector, considering the entire life cycle;

- Colombia to gain international recognition as a frontrunner in South America for the phase down of HFCs;

- Colombia to reduce energy consumption with the introduction of efficient equipment, thereby achieving affordable and sustainable energy flows due to high energy efficiency;

The Colombian NAMA for the domestic refrigeration sector is part of the Low Carbon Development Strategy (LCDS) and the Program for the rational and efficient use of energy and unconventional energy sources (PROURE); and is aligned with the implementation of the Montreal Protocol and the Policy for Sustainable Production and Consumption, the Environmental Policy for the comprehensive management of hazardous waste and the Policy for the comprehensive management of electrical and electronic equipment waste (WEEE).

Moreover, this NSP contributes to the green growth strategy with specific goals and measures proposed in the National Development Plan (PND) 2014-2018.

The NAMA for the Domestic Refrigeration Sector has been considered to be one of the options to contribute to the Colombian Intended Nationally Determined Contribution-INDC which aims to reduce greenhouse gas emissions 20 percent below projected business-as-usual (BAU) emissions by 2030.  

The Colombian NAMA will initiate the transformation towards the use of low GWP refrigerants and high energy efficiency standards in the domestic refrigeration sector. Effective policy instruments such as MEPS and EPR schemes, but also regulations for high GWP refrigerants will be implemented, analogous to EU policy. Thus the domestic refrigeration sector will be a pioneer for the RAC sector in Colombia, the mechanism will be transferred to other products of the appliance sector.

The project builds on the preparatory work (2013-2015) conducted by CCAP, the Center for Clean Air Policy, on behalf of the Colombian Ministry of Environment and Sustainable Development and financed by CAF, the Latin American Development Bank. The preparatory work included a sectoral study, assessing various policy options, an inventory in the domestic refrigeration sector and the determination of the mitigation potential. The inventory compilation and emission calculations were supported by GIZ, introducing the Tier 2 approach of the IPCC guidelines (IPCC, 1997) and applying the methodology for NAMA development in the RAC and foam sectors (IKI project under BMUB).