If Russia complies with the Kyoto Protocol, more than half of the country’s projects for cutting greenhouse gas emissions will not be able to go forward.
The Economic Development Ministry’s decision to approve a project for realizing Article 6 of the Kyoto Protocol will radically change the rules of the game for Russian companies with projects to lower greenhouse gas emissions.
Article 6 allows companies to receive credits from their foreign partners in exchange for lowering greenhouse gas emissions. Russia ratified the protocol in 2004 and the document came into force in February 2005. Since March 2008, the Economic Development Ministry has been accepting applications for joint projects. It has already received about 40 projects — including from Rosneft, TNK-BP, TGK-4, SUEK, Metalloinvest, UralChem and Ilim Group — but it still has not reviewed a single one.
“The current political situation does not call for a rush to review these projects,” a ministry official said.
According to the Russian Union of Industrialists and Entrepreneurs, there are already more than 100 projects ready in the country that would cut greenhouse emissions by 200 million tons.
Under the new regulations, the aggregate limit of emissions will be two-thirds lower than in 2007, or 100 million tons. Only Russian companies will be able to invest in the projects, and Sberbank will devise a system for putting the carbon credits into circulation, as well as delineate rules for their transfer and acquisition.
“We’re just opening the door a little bit to see what will happen. We will only let through the best projects and the most scrupulous investors,” the Economic Development Ministry official said.
The final version of the document will probably not include the 100-million-ton limit, he said.
Foreigners were excluded to “defend against the possibility of situations involving the transfer of a part of Russia’s sovereign debts,” said a ministry official who was involved in the document’s development.
“The projects are new innovative mechanisms that involve the transfer of a certain type of sovereign debt,” he said. “After all, we still have a conflict with Noga, which ended up in possession of Russian sovereign debt.”
Foreign corporations are not excluded from the process, as they will be able to work together with Russian companies, the official said. More than half of the 40 applications the ministry has received are from foreign companies, he said.
Putting carbon credits into circulation is a difficult task, since Russian law, unlike European legislation, does not consider carbon credits property, a Sberbank official said.
The bank does not earn much money on carbon credits, he said.
The bank’s services will “either be free of charge, or have a small fixed tariff,” he said.
Sberbank could have a conflict of interest when it tries to realize Article 6 of the Kyoto Protocol, because the bank offers credit to other projects within the framework of the protocol, said Yury Fyodorov, head of the national organization for supporting carbon-reducing projects. But a plan for joint implementation is badly needed by the market, even if the plan had limitations, he said.
A decision could be made at the end of this month ahead of a Presidium meeting on limiting greenhouse gas emissions, a government official said.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.