Climate Change

Content Overview

Human activities are the main driver of Climate Change, primarily due to the burning of fossil fuels that create heat-trapping gases. Global policies have evolved to try to address the threats posed by Climate Change and we are seeing an increased regulatory framework being driven by international organizations.

Climate Change regulations can typically be divided into two broad categories:

Industry specific regulations

The manufacturing industry includes the highest carbon-emitting sectors in the global economy with one third of total greenhouse gas (GHG) emissions and the world’s energy consumption attributable to manufacturing. 

This has resulted in an increased trend towards climate-friendly operations and energy efficient manufacturing practices and products, some of which are voluntary, whilst others are mandatory. 

This increased regulatory framework is being driven by international organizations, such as the United Nations (under the auspices of the UN Framework Convention on Climate Change) and the European Union (EU).

The entry into force of the UN Paris Climate Change Agreement on 4 November 2016 was a pivotal milestone in this regard. The Agreement, which requires signatory governments to maintain global warming to no more than 2C above pre-industrial levels, provides that each State must submit a Nationally Determined Contribution (NDC) to reduce GHG emissions to achieve the temperature target. 

The impact of the Agreement on businesses will therefore largely depend on whether those Member States will implement the measures outlined in their NDCs to meet their volunteered targets. These measures may include the introduction of carbon taxes and subsidies for green infrastructure.

The Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer is also crucial. Hydrochlorofluorocarbons (HCFCs) are widely used throughout the refrigeration, air conditioning and heat pump industry. The current replacement of HCFCs in such equipment is Hydrofluorocarbons (HFCs) which are currently being phased out under the Kigali Amendment. Manufacturers are therefore required to phase out their use of HFCs by replacing them with more climate friendly alternatives.

Product specific regulations

Product-specific regulations, largely based on the United Nations’ (UN) Montreal and Vienna Protocols, cover products including refrigerators, air conditioners, fire extinguishers and electronic equipment, which are manufactured using ozone-depleting substances (ODS) such as CFCs, HCFCs, HFCs, PFCs and SF6. Other examples of product specific regulations include carbon footprint labeling/ low carbon product certification (in Taiwan, South Korea, Japan and China).