Russia is set to join trade in greenhouse gas emissions. Prime Minister Vladimir Putin has approved a new procedure for endorsing companies' projects, and government officials all promise that the mechanism is about to be launched.
The first meeting of the countries that have signed the Kyoto Protocol is scheduled to take place in Copenhagen in early December. The Kyoto Protocol is due to expire in 2012 and governments must get together to discuss a new protocol. Although it ratified the document back in 2004, Russia did not join trade in emissions at that time.
With the Copenhagen meeting just a month away, Mr Putin has signed a resolution (Vedomosti has obtained a copy of it) which sets forth a new mechanism for implementing Article 6 of the Kyoto Protocol, a government spokesman revealed. The article allows companies to sell the reductions in greenhouse gas emissions, in the form of carbon dioxide equivalent units, to foreign partners, thus investing the money saved in energy conservation.
Under the former procedure, companies filed their applications with the Ministry of Economic Development. At the moment, there are about 40 projects still pending before the ministry (including those of Rosneft, TNK-BP, SUEK, TGK-4, Metalloinvest, Uralkhim, the Ilim Group, the Arkhangelsk Pulp and Paper Complex, and Lesozavod-25), but none of them have even received consideration yet. As an official from the Ministry of Economic Development explained earlier, "the political directive was not to rush things".
The new resolution relies on a mediator, Sberbank, to become the "operator of carbon units". Sberbank will select projects by tender and pass them on to the Ministry. Oleg Pluzhnikov, deputy director of one of the Ministry's departments, indicated that the Ministry of Economic Development would spend the next month working out the rules for the tender. Applications from 40 companies will be handed over to Sberbank. In addition, the bank will add Russian projects to the international register of carbon units (Sberbank will have an account and the projects will have subaccounts in that register), and monitor the project and the progress of implementation. The bank will do this work for a remuneration, the size of which is to be approved by the Ministry of Economic Development. The head of the relevant division of the bank, Vsevolod Gavrilov, indicated that Sberbank is already busy preparing a "carbon units operator service."
"The process of approving the applications will pick up the pace," Mr Pluzhnikov said. "The documentation will be examined by Sberbank, while the Ministry will retain all control and approval functions." GR Director of Ilim group, Dmitry Chuiko, is hopeful that "the bank will screen unnecessary projects".
Sberbank head German Gref was in charge of this issue when he was the Economic Development Minister. He was the one who asked Mr Putin, back in 2007, to allow companies to operate under the protocol, as a member of the Government Executive Office stated while explaining the Prime Minister's decision.
The new resolution removes any caps on the emissions whose reductions may be sold, while the draft document does just the opposite and cuts the limit to 100 million tonnes - one third of the current limit.
Deputy director of a Rosneft department, Rostislav Latysh, noted that the business community has long been waiting for the projects to be approved at the national level. According to him, Rosneft has filed two applications involving the utilisation of associated oil gas, and it is prepared to file five or six more.
A member of the government Executive Office revealed that it would be impossible to delay the resolution any further: "The Copenhagen conference is set for December and we can't go there without a coherent position on the agreement that has been in force for two years." Several projects are expected to be approved in time for December's meeting.
Yet, as Mikhail Yulkin, director of the Environmental Investments Centre, warned, one shouldn't be too enthusiastic about the new procedure until it actually starts working. "The tenders mentioned in the new resolution may prove to be a serious obstacle for the implementation of the projects." In his view, it's impossible to compare projects from different industries which have different parameters and goals.