The Kremlin has recently begun to apply pressure that it be allowed to hold on to it Kyoto carbon credits in the run up to Copenhagen. But environmentalists insist that allowing this roll over would hobble any treaty by making it far cheaper to buy up surplus Russian credits than to actually undertake efforts in energy efficiency, renewable energy and technologies to abate global warming.
Russia has currently well surpassed its Kyoto Protocol emissions obligations, posting a 34 percent reduction in its emissions of greenhouse gasses under 1990 levels. Kyoto specified that the treaty’s signatories were to post 20 percent cuts under 1990 levels. This means that when the treaty expires in 2013, Russia will post the largest drop from 1990 levels of any country that ratified the treaty.
The dispute over whether Moscow will be able to keep its credits is unlikely to be settled by the time global leaders meet in eight days in Copenhagen for the COP15 international summit on climate change, where a replacement for Kyoto is hoped to be negotiated.
Many are now warning that Russia’s piggy bank of carbon credits could put Moscow, as well as many other former Eastern Bloc capitals, in a position to be an 11th hour party poopers at the talks.
One Russian environmental group, Ecodefence, which is closely affiliated with Bellona, has vociferously opposed that Moscow be allowed to hold on to its credits. Russia should set a more challenging target by maintain its current Kyoto compliant emissions levels through 2020 and give up its carbon surplus, said the groups co-chair and Bellona Web contributor Vladimir Slivyak.
Buying off damages
In 2004, when Russia ratified the Kyoto Protocol, officials in Moscow estimated Russian companies could attract $6 billion to $9 billion in investments into emissions-reducing technologies.
Russia held out until the last minute to uncap it’s pen – the result of protracted number crunching on the windfall it would reap from the carbon trade, said officials close to the talks at that time.
In futures trading for contracts maturing next year in Europe, prices are about €15 per carbon credit, the Financial Times reported earlier this month. One carbon credit offsets one ton of carbon emissions.
At current prices, the total value for Russian carbon credits could be between €30 billion and €45 billion, ($40 billion to $60 billion) said the Financial Times. The downside is that, should Copenhagen talks to devise a replacement agreement for Kyoto, the carbon credits could become a poof of air.
Russia is apparently laying its chips on the former.
The legerdemain of emissions cuts proposals
A little over a week ago, Russian President Dmitry Mededev announced at Swedish summit that Russia would be bringing emissions cuts of 20 to 25 percent under 1990 levels to Copenhagen.
At first blush, that sounded like an incredible environmental feat for the nation not known for its distinguished role in ecological restraint. Russia is, in fact, currently the world’s third largest emitter after China and the United States. Medvedev’s announcement was also seen as a vast improvement over Russia’s June announcement of a 15 percent cut that would have accelerated emissions growth.
But at second glance, anyone paying attention to the arithmetic realised Russia had – again – proposed an increase in emissions by as much as 9 to 14 percent. Further, though Russia’s emissions may be down by 34 percent at the finishing line, they have risen an extraordinary 15 percent since 1998 under former President Vladimir Putin’s economic and industrial upswing.
International observers waking up to the bait and switch
This has become a hot topic over the past several days due to the number of sellable carbon credits Russia amassed under Kyoto, setting the stage for a scene in Copenhagen whereby Russia would be able to flood the market with cheap credits to counties who emitted beyond their Kyoto obligations under the carbon trading scheme envisioned in the protocol.
The main complaint levied against Russia in this growing dispute is that its drop in emissions was due to the near total collapse of its industrial economy in the wake of the Soviet Union’s fall.
Russia has responded by saying it makes no difference where its drop in emissions came from, and its climate negotiators are arguing that the drops are so substantial that they cancelled out emissions released by the United States over the same period.
What Kyoto foresaw
By using 1990 greenhouse levels as the baseline, the Kyoto treaty in effect gave a free ride to Russia and other former Soviet bloc countries because emissions from their diminished industries were already far below that level when the pact was signed in 1997.
This emissions plunge, regardless of how it came about, has become a source of national pride to Russian negotiators, as the drops were paid for by the economic failures that plagued Russia throughout the 1990s.
"It may not have been intentional, but we went through very difficult times and paid a high price for this reduction," Igor Bashmakov, director of the Centre for Energy Efficiency in Moscow who has advised the Kremlin on climate-change policies told The Post.
"We’ve already done it, while other countries are just talking about it," he said.
He added that it is important to carry over Russia’s carbon surplus to recognise its contribution to the global effort and establish a "strategic reserve" of credits that would allow Russian leaders to commit to further emissions cuts with confidence.
Ned Helme, director of the Center for Clean Air Policy in Washington told The Post that that if Russia is allowed to keep its surplus, Poland and other Eastern European countries may insist on doing so as well – and the European Union is opposed to that.
The Russian surplus is projected to grow to 5 to 6 gigatons of carbon dioxide by 2012, and other Eastern European nations could bring the total surplus of credits to 7 to 10 gigatons, Anna Korppoo, senior researcher at the Finnish Institute of International Affairs, told The Post. Carrying over the surplus "would challenge the environmental integrity of the pact" by sharply increasing global emissions, she said.