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Ms. COOK. I'm finished; thank you, Mr. Chairman.
STATEMENT OF ART D. FITZGERALD, ASSISTANT VICE PRESI.
DENT FOR ENVIRONMENTAL AFFAIRS, NORTHERN TELECOM Mr. FITZGERALD. Thank you, Mr. Chairman.
I am Arthur FitzGerald, Assistant Vice President of Environmental Affairs for Northern Telecom, and am pleased to be here to describe three things: my company's CFC elimination program, our experience with CFC replacement technologies, and our partnership with the Mexican government to eliminate ozone-depleting solvent emissions from Mexico's electronic manufacturing industries.
Northern Telecom is the leading global supplier of fully digital telecommunications switching systems, providing products and services to telephone operating companies, corporations, government, universities, and other institutions worldwide. We employ 49,000 people, with revenues last year of $6.8 billion. Headquartered in Nashville, Tennessee, Northern Telecom, Inc, the U.S. company, employs approximately 22,000 people across the Nation, and substantially all of our sales were products and services manufactured and provided in the U.S.
At the time of the signing of the Montreal Protocol in 1987, Northern Telecom was a significant user of CFC solvents. In each of the years 1986 and 1987, we purchased about a million kilograms or 2.2 million pounds of CFCs and halons. CFCs were used mainly for cleaning of printed circuit boards and the halons were used for fire protection in both hand-held extinguishers and room-flooding applications. Following an internal study in 1988 with the U.S. Environmental Protection Agency, Northern Telecom committed to a three-year CFC elimination timetable.
At a UNEP conference in October 1988, Northern Telecom announced that it would be the first corporation in its industry sector to pursue a global phase-out objective for CFC solvents, having determined that Northern Telecom could meet its manufacturing requirements without using CFCs. True to our word, we will be at zero CFC solvent usage by the end of this year.
From mid-1988 to mid-1991, we reduced our usage by 90 percent. Today, all Northern Telecom locations have successfully switched to no-clean concepts for manufacturing with the exception of one facility at Santa Clara that chose water cleaning.
In the no-clean concept, fluxes and pastes with a low solids content are applied to prepare the components for soldering. With a low solids content, very little residue is left on the printed circuit board and on the joints after soldering. Product performance is not affected. In fact, we experienced quality improvements in many cases.
Water cleaning uses water-soluble fluxes that are removed in a closed-loop, aqueous cleaning system. I should point out that the no-clean concept may not be the answer for every company and, indeed, cannot currently be used by companies required to meet military specifications. However, these specifications are being modified to accept alternatives to the traditional CFC solvents.
Northern Telecom facilities that have made particularly large reductions in CFC use include those located in Research Triangle Park; Stone Mountain, Georgia; Chicago, Illinois; Rancho Bernardo, California; Morrisville, North Carolina; and West Palm Beach. I should point out that Northern Telecom's largest plant, located in Raleigh, accounted for 25 percent of our global use of CFC solvents at the start of the project. It was given the lead role in finding alternative technologies and transfer of those technologies to all other Northern Telecom locations. The Raleigh plant stopped using CFC solvents at the end of last year.
We also have good news to tell with regard to the cost of our CFC elimination program. Northern Telecom has expended approximately $1 million over three years for equipment modifications, R&D, and professional time. However, our total savings to date amount to $4 million for a net savings of $3 million. These savings are ongoing through reduced purchases of CFCs and savings in taxes and disposal expenses.
I believe that Northern Telecom has the most aggressive CFC solvent elimination program in our industry. Our commitment to being a leader and our partnership with the EPA as early as March 1988 has led to several things.
One is a manual of CFC-113 solvent management practices for the EPA which has been published by the EPA. Two is a significant contribution to an ad hoc solvents committee composed of industry, military agencies, and governments to revise U.S. Military CFC specifications. Three is our co-founding of the Industry Cooperative for Ozone Layer Protection, which now has 17 multinational corporations as members. They are all major CFC solvent users who have pledged to an early phase-out and to share their knowledge with industry, government, and other stakeholders worldwide. The EPA, the U.S. Air Force, and other governments and institutions from the Soviet Union, Japan, Sweden, Mexico, and the United States are affiliate members of this important new model for technology transfer.
Four is the creation for ICOLP of a database called OZONET to carry alternatives to ozone-depleting solvents electronically to the world user community. It can be accessed by over 90 percent of the world's business telephones; most often, by a local telephone call.
The final component is our taking the lead role in a first of its kind project to transfer new technology to Mexico's solvent-using industry. Under the terms of the Montreal Protocol, a multilateral funding mechanism has been established to assist developing countries with programs to retrofit industry with alternatives to ozonedepleting substances.
Northern Telecom, in partnership with the EPA and the Department of Urban and Ecological Development of Mexico, announced on May 6, 1991 in Washington that the first project under the mechanism would proceed as quickly as possible so that Mexico could meet its commitment to complying with the same deadlines that developed countries are obliged to meet under the Protocol. Northern Telecom held the first planning seminar on June 7th for the Tiajuana and Mexicali Maquiladoras, and the first multiple-day workshop is planned for September.
This hands-on training session will be undertaken by experts from Northern Telecom and other companies that are members of ICOLP. Workshops will be followed by visits of Mexican industry representatives to plants of Northern Telecom and ICOLP companies. Subsequently, new needed technologies and equipment will be identified and any necessary funding will be applied for under the Montreal Protocol. Phase 2 is to include the actual purchase of retrofitting equipment and technologies.
Senator Baucus. I will have to ask you to think about winding down.
Mr. FITZGERALD. Thank you, Mr. Chairman.
STATEMENT OF KEVIN FAY, EXECUTIVE DIRECTOR, ALLIANCE
FOR A RESPONSIBLE CFC POLICY Mr. Fay. Thank you, Mr. Chairman. I appreciate the opportunity to appear before the subcommittee today to discuss the status of ozone protection efforts, domestically and internationally. The alliance is a coalition of producers and users of CFCs and their substitutes in the United States.
The announcement earlier this year from NASA of new data indicating accelerated depletion of the ozone layer over North America is a cause for increased concern. More recently, some scientists have stated that the eruption of Mount Pinatubo could temporarily further enhance ozone depletion.
Despite the new data and natural events beyond our control, the global and domestic policy process is working. The phase-out of CFCs and the reduction and buildup of atmospheric chlorine concentrations is moving forward. It appears that we have reduced the potential peak chlorine concentration by more than 50 percent.
At the June meeting of the Protocol parties in Nairobi, the diplomats undertook significant discussions concerning the recently released scientific information and the need to take this information into account as part of the Protocol's built-in assessment process. The purpose of the assessment process is to ensure that the Protocol remains environmentally effective as well as technologically and economically sensible.
The current assessment process is scheduled to be completed by the end of this year and will be the basis for further amendments to the Protocol to be adopted in September 1992. The assessment will indicate some ability to accelerate the phase-out of fully halogenated CFCs. We also expect the assessment will emphasize once again the need for the HFC and HCFC compounds in order to accomplish this phase-out.
It is expected that this assessment will and should be instrumental in the EPA's own consideration of accelerating the phase-outs under section 606 of the Clean Air Act. However, we do not believe that the policy development process should get ahead of the scientific and technical assessment framework provided for in the Protocol.
The new scientific information creates a greater sense of urgency concerning the effects of ozone depletion and highlights the need for additional effects research and identification of steps for potential effects remediation. It also emphasizes the continued need for a balanced and effective global process that maximizes global participation.
U.S. industry has made significant technological progress in reducing CFC usage and emissions, in recovering and recycling used CFCs, in identifying potential alterative compounds to assist in the elimination of the fully-halogenated CFCs, and in shaving years off of the normal commercialization process for these new compounds and technologies. Chemicals, manufactured products, and manufacturing processes are being introduced today which offer the hope that we can eliminate CFC compounds from new products and processes in relatively short order.
In implementing Title VI of the Clean Air Act Amendments, EPA has recognized the desirability and reasonableness of coordinating its domestic responsibilities with the ongoing international effort. As in the Protocol assessment process, the domestic regulatory initiatives to date have included substantial participation by industry, environmental organizations, and government representatives. We believe that the agency is working to establish an effective program that continues the working relationship that has been a hallmark of the Protocol process.
It is still early in the rule-making process to comment with great precision on the rules being developed. Based on the industry success to date, however, EPĂ will be challenged to develop regulations that can keep pace with the technological developments underway.
U.S. usage of CFCs has declined substantially ahead of the schedule provided by the Protocol or the Clean Air Act. According to EPA, usage in the first Protocol control
year was approximately 23 percent less than that allowed by the Protocol. It is currently expected, assuming EPA's rapid approval and acceptance of HFCs and HCFCs that the transition away from CFCs and reliant technologies could be virtually complete for most new products by 1997.
This does not address one issue of major concern to the U.S. economy, the existence of a huge, installed base of equipment that relies upon CFCs for operation. The United States has the highest utilization rate of air-conditioning and refrigeration equipment in the world. This CFC-reliant equipment has been valued at more than $135 billion. The HCFC-reliant equipment is currently valued at more than $150 billion.
Absent other technological breakthroughs, CFC shortfalls after 1997 could result in the early retirement of some of this equipment or reductions in operating efficiencies. The latter effect could lead to significantly increased energy consumption by this equipment.
Careful policy consideration must be given to the consumers and owners of existing equipment, which may remain in service for anywhere from 10. to 40 years. While several European countries have called for accelerated CFC phase-out, not one of these countries relies to the same extent on air-conditioning and refrigeration technology as does the United States. Nor do they have the climate conditions that would require such reliance.
Concerns have been expressed for the use of HCFC compounds as part of the transition out of CFCs because of their low but measurable ozone-depleting potential. The industry recognizes this concern. U.S. industry was the first to acknowledge that HCFCs are bridging compounds. Their use allows developed and developing countries to phase out of CFCs more rapidly.
As a family, HCFCs are an 85 to 95 percent improvement over CFCs. The Protocol's Technology Assessment Panel has determined that commercialization is essential in order to accomplish the first priority of the Montreal Protocol, the elimination of CFCs. HCFCs are not perfect, but their energy-efficient characteristics and their very low ozone-depleting potential elevate their importance as a substitute technology for CFCs.
Industry is continuing to work with EPA and other Protocol parties on the appropriate use of these and other compounds. It is nonproductive at this time to debate faster phase-out dates for HCFCs beyond those contained in the Clean Air Act when the potential chlorine contribution from developing countries' CFC usage is substantially greater than the potential chlorine contribution from worldwide HCFC usage.
In summary, U.S. industry is poised for the rapid commercialization of ozone-protecting technologies. The new scientific data call not for a change in policy, but for the continued aggressive implementation of the international and domestic policy frameworks already in place. It is imperative that we continue to rely on these frameworks in order to achieve the next crucial steps in the ozone protection process.
Senator BAUCUS. Thank you very much, Mr. Fay.
Ms. Claussen, did the United States agree to the 1997 phase-out date?
Ms. CLAUSSEN. Did we?
Ms. CLAUSSEN. The United States is waiting for the results of the assessment, which I am convinced will show that it can be done faster than the year 2000, and we'll take a policy position at that time, which is when we will renegotiate the Protocol in 1992.
Senator BAUCUS. When do you expect to do that?
Ms. CLAUSSEN. I believe the drafts will be available in November. There will be a meeting of the working group of the parties in January and, at that time, we will begin to draft amendments, because there is a six-month period for review of the amendments before actions can be taken.
Senator Baucus. Why wait? That is an international assessment, isn't it?
Ms. CLAUSSEN. Yes.
Senator BAUCUS. What is the EPA analysis? Does EPA agree with the data that came out not too long ago?
Ms. CLAUSSEN. We released it, yes.
Senator BAUCUS. You agree with it then, so what's the problem? In fact, your own statement says, “U.S. efforts may not be enough.
Ms. CLAUSSEN. Yes. The issue is exactly what is the right place to end up. Is it 1997? Is it faster interim dates? Is it better control of some of the HCFCs? Those are the things that I think we really
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