Trust for the Destruction of Ozone Depleting Substances

REPORT OF THE CORPORATE TRUSTEE FOR THE YEAR ENDED 31 MARCH 2011

In respect of the year April 2010 to March 2011 the trustee presents the following report.

Background - Ozone Depleting Substances and Greenhouse Gases
To support the international protocol established to protect the environment from release of ozone depleting substances, The Institute of Refrigeration Heating and Air Conditioning Engineers of New Zealand (Incorporated) formed a Trust in 1993 with its object being to arrange for a fund to cover the costs incurred, following analysis, of the collection, storage, and disposing, in an environmentally acceptable way, of CFCs and HCFCs and mixes containing them, which have been used in the refrigeration and air conditioning industries.

Following a series of consultations with interested parties in late 2007, the Trust’s objects were broadened to encompass collection, storage, and disposal of HFCs and any other Synthetic Refrigerants which contribute to the build up of Greenhouse Gases and which have been used in the refrigeration and air conditioning industries.

The Trust is a charitable entity registered through the Charities Commission.

Imposition of Levy on CFCs, HCFCs, and HFCs
Under a signed agreement with refrigerant wholesalers a levy at a rate of $1.50 per kilogram is received on the sale of CFCs, HCFCs, and HFCs.  The phase out period for the importation of ozone depleting substances currently concludes in 2015 and so funding of the Trust by way of levy on CFCs and HCFCs will cease from that year.  The Trust activities are long term and accordingly the trustee closely monitors the amount of levy being received to determine if the levy is sufficient to cover costs of collection and destruction.

Levies Received
From August 1993 to March 2011 total levy receipts have exceeded $8,344,000 reflecting the sale by wholesalers of in excess of 7,478,000 kilograms of CFCs or HCFCs or mixes thereof with an ozone depleting potential of 0.01 or more (as defined by the Ozone Layer Protection Act) and HFCs which contribute to the build up of Greenhouse Gases.

Collection Facilities
Refrigerant Recovery Operating Company NZ Limited was established to own transfer units and storage tanks required to store collected refrigerants.  Collection/storage points are located at the sites of Patton Limited in Auckland, Wellington and Christchurch.

In recent years there has been a substantial and sustained increase in refrigerants which has led to pressure from time to time on available storage for collected refrigerants.  The Trust is acquiring further cylinders to increase storage capacity and will continue to monitor throughput to determine whether further cylinders are required for storage capacity issues.

The Trust is further focussing on extending the coverage and frequency of regional collections to ensure collection of refrigerants for destruction is maximised throughout the country.

The Trust continues to monitor the collection process to ensure collections are being maximised in the most efficient and cost effective manner.

Destruction of Refrigerant
To 31 March 2011, 194,200kg of refrigerants collected have been destroyed with a further 8,600kg of refrigerants collected awaiting destruction.  The refrigerant destroyed has had the impact of saving up to 380,000 tonnes of ozone and reduced the buildup of greenhouse gases by up to 70,000 tonnes of CO2 equivalent.

There has been a substantial increase in the rate of collection and destruction of used refrigerants in the past three years which is a very positive outcome for the environment but reinforces the continuing need to review funding from levies.  A strong continuing focus is required on “broadening the net” for the large number of HFC importers to ensure refrigerant recovery levies are collected fairly across end user groups.

Product Stewardship Scheme
The Trusts product stewardship scheme was accredited by Ministry for the Environment under the Waste Minimisation Act in September 2010.  The trusts intention is to continue to operate a product stewardship scheme which is supported by industry groups rather than imposition of a scheme that is controlled directly by Government.

The continuing accreditation of the product stewardship requires achievement of various objectives and targets which focus on higher awareness and participation throughout the industry and increased levels of collection and destruction of used refrigerants.

Climate Change Matters
The Trust continues to be active in Climate Change matters primarily seeking a regime which provides a level playing field for all participants in the New Zealand refrigeration and air conditioning industry while supporting the environmental focus on emissions.

Communication
The Trust regularly communicates with Ministry for the Environment and Ministry of Economic Development as a matter of public interest in the potential harm from ozone depleting substances and greenhouse gases.

The actions of the New Zealand refrigeration and air conditioning industry are making a major contribution toward protecting the ozone layer and reducing the build up of Greenhouse Gases in the atmosphere.

Promotion
Promotion of the Trust’s activities is by way of a presence at relevant conferences, promotion at industry group meetings, its website - www.refrigerantrecovery.co.nz , and brochures and posters are available for distribution.

The issues with used refrigerants, and how Recovery is tackling these issues, are outlined in the website and brochures.

Accumulated Funds
At 31 March 2011 the Trust had accumulated funds of $5,230,000 after providing for costs of destruction of used refrigerants collected but not yet destroyed.  The trustee has a conservative approach to investment of funds pending their application to the collection and destruction process.  Available cash has been placed on bank deposit and invested in Government, Council, Utilities, and Corporate bonds.

On behalf of the Directors of Refrigerant Recovery NZ Limited, as corporate trustee of the Recovery - Trust for the Destruction of Synthetic Refrigerants: