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Russia is changing the rules of the game on Kyoto projects and putting new barriers for low-carbon economy

Olga Senova

Russia’s Federal Government regulation “On measures to implement Article 6 of the Kyoto Protocol to the UN Framework Convention on Climate Change” was signed on September, 15. The approval procedure of JI projects is changing again and Sberbank is gaining even more authority. The principles of projects selection are very unclear and there are many excessive and unreasonable requirements concerning the documentation to be provided.

The new regulation does not imply any regular procedure of collecting JI applications, so Sberbank, which is the carbon operator, may announce biddings as seldom as it wishes.

RSEU Climate Secretariat would like to emphasize the fact that since the beginning of the first commitment period under the Kyoto Protocol (i.e. since 2008) there have been only 2 biddings conducted, 58 project approved for a total emissions reduction of 60 mln tons, and currently there is a bidding in process, for the projects in 3 sectors – industrial processes, energy and waste for the total of 70 mln tons of CO2-equivalent. The applications (bids) have been allowed in starting from September, 5.

In this case it may hardly be seen as a positive thing that instead of a set limit for each bidding of 30 mln tons of CO2-equivalent, as it was during the last two biddings, there is a total limit of 300 mln tons set until the end of 2012. Neither the KP itself not the UNFCCC mention any limits of emissions reduction, thus Russia’s reasons to set them are unclear. Furthermore, Russia’s potential of GHG emissions reduction is way bigger than that of 300 mln tons. Russian Union of Industrialists and Entrepreneurs (RSPP) says that the remainder of 170 mln tons does not correspond to the Russia’s business actual JI potential, and is asking to raise the bar up to at least 500 mln tons.

The RSPP provided their comments to the Regulation. In short, “this document creates conditions for corruption on all stages from submitting the application, through the selection process to the adoption of projects, to the presentation of the progress report on projects implementation by investors, to the release of emission reduction units to selling it on the market. We are suggesting a thorough revision of the document with consideration to the aforementioned remarks and with the help of the RSPP’ experts. The RSPP is ready to submit its own version of the document to the Ministry for Economic Development within a week’s time if needed.”

The new procedure creates more unnecessary administrative restrictions and obligations for investors and leads to even larger material and time expenditures for bidders. Besides, it is complicated by the fact that the Regulation requires the participation of the Operator (i.e. Sberbank) in the closing of deals, while this requirement goes against Russia’s Civil Code , the Article 1 of which provides freedom of contracts and the unacceptability of interference in anyone’s private business.

RSEU Climate Secretariat would like to point out that political decisions should stimulate projects that help achieve GHG emissions reduction by means of energy efficiency and the development of renewable energy. Currently, Russian politicians’ decisions are putting more obstacles on the way of low-carbon projects.