Russia on Kyoto market: only promises traded so far

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MOSCOW. (RIA Novosti commentator Tatyana Sinitsyna.)

Large Russian companies like RAO UES of Russia and Gazprom, which are interested in the Kyoto program, have already found partners abroad and are eager to start work. The energy industry, with 80% of its facilities outdated, is particularly interested in practical measures. Today Russian power plants account for about one third of national carbon emissions, and for almost 3% of the global emissions.

"Joint projects are the best way for Russia to implement the Kyoto Protocol," said economist Viktor Danilov-Danilyan, associate member of the Russian Academy of Sciences. He is right: such projects can attract urgently needed investment. Apart from saving on emissions, they also have many indirect effects on product quality, resource spending, work standards, etc.

In the summer of 2005, RAO UES and the Danish Environment Protection Agency signed an agreement on two carbon projects related to the implementation of new technology in Russia's eastern regions - at the Amur thermal power plant (Khabarovskenergo, the Far East) and the Mednogorsk thermal power plant (Orenburgenergo, the Urals). Technological overhaul is expected to reduce their CO2 emissions by 1.8 million tons. The Amur plant is to go over from coal to gas, while Mednogorsk will fully overhaul its boilers. The DEPA is ready to invest Euro 20.071 million in the reconstruction. In exchange, Russia will hand down to Denmark its CO2 emission quota of 1.8 million tons. That is the plan. Similar energy saving projects are being worked out for the Irkutsk and Omsk regions in Siberia.

Are these first Kyoto deals beneficial for Russia? "At present, the most important thing is not money, but to get the thing going," said Yuri Fedorov, director general of a national organization that supports carbon absorption projects. "It is important to distinguish between two different prices. The price for real goods is one thing, but so far we have been selling only promises, which naturally cost less." He is positive that if the first projects are launched successfully and people see that Russia is a reliable partner, prices on Russian projects will go up.

Russia ratified the Kyoto Protocol 18 months ago. So why are there still only promises on the quota market? Obviously, political decisions cannot reduce emissions from a burner or close down fuming pipes. Practical steps are necessary, and the government started them as soon as the Protocol came into force in February 2005. It endorsed the Concerted Plan of Action to carry out the Kyoto Protocol and set up a Kyoto inter-departmental committee. But then the process stalled and put the "Kyoto situation" on hold. Now everyone is waiting for the legal framework to be created. At first government planned to work out the necessary laws by May, then by June, and now there is talk of September. Only then will they be submitted to the parliament.

Russia, which under the Kyoto Protocol undertook to reduce greenhouse gas emissions (17.4% of the level of 1990), needs to enter the global market of excessive quotas, of which it has plenty. In compliance with the Marrakesh agreements, the Russian bank of quotas was supplemented by another 37 megatons of carbon for forest-absorbed CO2. The country will not exceed the emissions level set by the Protocol for a long time. Absence of risk gives reasons not to hurry. "As long as the oil dependence remains both the ideology and economy, no one will take the problems of the Kyoto Protocol seriously," says Sergei Kurayev of the Russian Regional Environmental Center, one of the Protocol's authors. "Why would we need two or three billion from Kyoto, when the treasury is bursting with oil billions?"

Whether there is the Kyoto Protocol or not, mankind will still have to address energy efficiency. Resources are running out, energy prices have gone beyond sensible levels. "Still, the Kyoto Protocol is a good incentive to develop a modern and environmentally friendly economic system," Kurayev says. In the run-up to the Group of Eight summit, which has chosen energy security as its priority subject, it is important to note that Kyoto Protocol mechanisms that encourage energy saving, energy efficiency and extensive use of renewable sources of energy are an inalienable part of energy security.

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