Second Russian competition of projects under the Kyoto Protocol - which projects will be supported - renewable energy or carbon monopolies?

Vladimir Latka

On the 1st of November the Savings Bank of Russia announced the start of examination of the applications for the second call for Joint Implementation Projects (JIPs) in the framework of the Kyoto Protocol. The competition results has not been made public yet. Russia can benefit 40 billion euros of foreign investments and up to 300 million tons of CO2 emissions reductions due to cooperation within the JIPs.

58 project applications are considered within the competition. The list of projects under consideration is presented on the web site of the Savings Bank of Russia. The second competition will distribute 30 million of emission reduction units (ERUs), each equivalent to 1 tonne of CO2 emissions. In the first competition, the same amount of ERUs was considered, but the Ministry of Economic Development approved projects to reduce emissions by more than 40 million tons (for the duration of the Kyoto Protocol, from 2008 to 2012). The first call for proposals for joint implementation projects was held in the spring of 2010, with 44 applications from 35 companies totaling reductions of 77.5 million tons of CO2-equivalent. Of those, the Ministry of Economic Development approved 15 JIPs by at the end of July 2010.

The examination is carried out in accordance with the Regulation on Implementation of Article 6 of the Kyoto Protocol to the UN Framework Convention on Climate Change, approved by Governmental Decree of the Russian Federation № 843 and the "Rules of bids ..." approved by Order № 485 of the Ministry of Economic Development of the Russian Federation. In accordance with these acts, the Savings Bank of Russia is the operator of carbon credits - the structure through which selling of ERUs is performed. JIPs under the Kyoto Protocol suggest that the donor countries invest in an emission reduction project in the host country. The project results in reduction of emissions, and ERUs are transferred to the donor country.

According to the approved rules, the selection of applications will be based on compliance with the three main criteria: energy and environmental performance, technical and financial capacity, economic and social benefits of the project. The applications selected by the Savings Bank will be approved by the Ministry of Economic Development of the Russian Federation. The approved projects will be recorded in the registry of this ministry.

The major part of project applications submitted to the second competition are from:

• power generation companies (11 applications),
• metallurgical enterprises (9 applications),
• pulp and paper and woodworking industry (9 applications),
• oil and gas companies (8 applications),
• chemical and petrochemical industries (7 applications),
• cement plants (5 applications).

Also, there are four project applications to upgrade heat supply systems in cities and towns, and four applications from companies involved in recycling of household waste. (Only the last four projects, as well as four projects on utilization wood processing waste and one of the projects on heat supply of cities can be attributed to projects that contribute to the development of alternative energy.) It is important to note one application from the food industry.

Unfortunately, there is complete absence of applications from manufacturers of renewable power generating facilities and components to them, of energy saving equipment and materials, including high-tech ones. If no specific prohibition (or filter) was applied, then this "weirdness" reveals three unfortunate regularities in the economic structure, economic management and managing the preparation of JIPs in Russia:

• an obvious resource domination in the economic structure,
• reluctance or inability of the government and economic agencies to stimulate high-tech industries and sectors, including renewables,
• insufficient, and probably a poor work with potential applicants, since this work could largely compensate for the first two negative trends and promote JIPs in the high-tech sectors.

Implementation of the goals stated in the Energy Strategy of Russia until 2030 and the Basic directions of state policy in the sphere of energy efficiency of electric power from renewable energy sources for the period up to 2020 is again stalled. This applies both to support of alternative energy and innovative development in the energy sector as a whole.
Here is an abbreviated list of projects submitted to the second Russian competition of JIPs under the Kyoto Protocol with the stated emission reduction units for each of them.

Applications of power generating companies (totally 11,421,538 ERUs):

• construction at Yayvinskaya GRES, Perm region - 924,364 ERUs;
• construction at the Surgut GRES-2, Tyumen region - 2,344,040 ERUs;
• construction at Nevinnomysskaya GRES - 1,296,735 ERUs and Sredneuralskaya GRES - 1,322,177 ERUs;
• construction of Kurgan HPP-2 - 849,422 ERUs;
• construction of gas turbine power plant "Kozhukhovo", Moscow - 809,849 ERUs;
• construction of gas turbine power plant "Tereshkovo, Moscow - 627,472 ERUs;
• expansion of South HPP-22, Saint-Petersburg - 1,603,439 ERUs;
• reconstruction of Pervomayskaya HPP-14, Saint-Petersburg - 986,501 ERUs;
• development of the Tyumen TPP-1 (Fortum) - 997,625 ERUs;
• reconstruction of hydro power plants of the "Nevsky" branch - 659,914 ERUs;

Applications of metallurgical enterprises (totally 21,626,690 ERUs):

• Introduction of electric furnace steel production method for MMK, Magnitogorsk - 7,000,000 ERUs;
• reconstruction of the Seversky Tube Works - 2,241,465 ERUs;
• reconstruction of JSC "Asha Metallurgical Plant", Asha - 1,975,409 ERUs;
• modernisation of Amurmetal, Komsomolsk-on-Amur - 3,339,629 ERUs;
• modernisation of ChTPZ Group - 2,338,874 ERUs;
• modernisation of Air Liquide Severstal company - 514,726 ERUs;
• reduction of emissions of perfluorocarbons at OAO Rusal Krasnoyarsk - 1,165,116 ERUs;
• reconstruction of blast furnace at the JSC "CMH", Tula - 587,272 ERUs;
• implementation of energy efficiency projects at NLMK, the Lipetsk Region - 2,464,199 ERUs.

Applications from pulp and paper and woodworking companies (totally 7,011,674 ERUs):

• Utilization of biomass at pulp and paper mill JSC Ilim Group, Bratsk - 1,391,280 ERUs;
• utilization of biomass in Segezha PPM - 284,370 ERUs;
• utilization of biomass in the JSC "Arkhangelsk PPM" - 1,021,452 ERUs
• replacement fuels and waste management at the KronoKlimat plant - 2,470,865 ERUs;
• utilization of secondary heat due to introduction of heat exchangers at "Alfa Laval" in the branch of JSC Ilim Group, Ust-Ilim - 741,271 ERUs;
• utilisation of wood processing waste for energy production at JSC "Sawmill 25", Arkhangelsk - 215,362 ERUs;
• utilisation of wood processing waste at the JSC Ilim Group JSC in Ust-Ilimsk - 612,590 ERUs;
• utilisation of wood processing waste at OJSC "Novovyatsk Ski Plant - 172,705 ERUs;
• production of fuel pellets from waste wood at the JSC "Sawmill 25", Arkhangelsk - 101,779 ERUs.

Applications from oil and gas companies (totally 10,383,023 ERUs):

• Utilization of associated petroleum gas (APG) at "Yenisei Ltd." , Usinsk, Komi Republic - 159,596 ERUs;
• utilization of APG at oil and gas condensate field Yarakta - 588,349 ERUs;
• utilization of APG at Serginsky oil field - 107,876 ERUs;
• utilization of APG at Kharampurskoye group of deposits of OAO "NK Rosneft" - 1,500,000 ERUs;
• utilization of APG and electricity production at Hasyreyskoe oil field - 711,277 ERUs;
• utilization of APG and electricity production at the South Hylchuyskoe field, the Nenets AO - 1.3 million ERUs;
• efficient use of APG at OAO Tatneft - 115,925 ERUs;
• APG processing at South Balyksky Gas Processing Complex - 5.9 million ERUs.

Applications from chemical and petrochemical plants (totally 12,255,011 ERUs)

• Reducing emissions of nitrous oxide at the enterprises of "Cherepovets Azot"- 2,741,463 ERUs;
• reducing emissions of nitrous oxide on KuibyshevAzot - 2,749,200 ERUs;
• reducing nitrous oxide emissions at the "Minudobreniya" company, Rossosh, RF - 4,058,676 ERUs;
• utilization of waste gases at JSC Shchekinoazot - 153,721 ERUs;
• utilization of waste gases at Khimprom industrial amalgamation - 354,055 tons;
• modernization of furnaces at the "LUKOIL-Permnefteorgsintez" company, Perm - 832,946 ERUs;
• introducing energy-saving technologies at Nizhnekamskneftekhim - 1,364,950 ERUs.

Applications from cement plants (totally 3,549,396 ERUs)

• Energy-efficient modernization of JSC "Mordovcement" - 1,170,036 ERUs;
• modernization of the Savinsky Cement Plant - 295,533 ERUs;
• modernization of the Shchurovsky Cement - 734,894 ERUs;
• construction of a new process line at Sukholozhskcement - 496,205 ERUs;
• construction of a new energy-efficient plant at "Cement Ltd." Slantsy - 852,728 ERUs.

Applications for upgrading heating systems of cities and towns (totally 1,088,029 ERUs)

• Integrated project to replace fuel and improve energy efficiency, Priozersk - 100,000 tonnes of CO2 equivalent;
• reconstruction of central heating stations, Strezhevoy town, Tomsk Oblast - 69,698 ERUs;
• transfer from coal to the energy from wood waste, Onega town, Karelia Republic - 788,054 ERUs;
• using wood waste for heating, Severoonezhsk town, Arkhangelsk Oblast - 130,277 ERUs.

Applications from companies engaged in recycling of household waste (totally 4,813,868 ERUs)

• Collection and recycling of gas at the "Shirokorechensky" landfill, Yekaterinburg - 958,868 ERUs;
• landfill gas recovery in Moscow - landfill DMITROVSKIJ - 1,245,000 ERUs, landfill HMETEVO - 1,167,000 ERUs, polygon TIMOKHOVO - 1.443 million tonnes of CO2 equivalent.

Application from the food industry

• The use of butter production wastes to produce steam and electricity at "Aston", Rostov oblast - 229,827 tonnes of CO2 equivalent.

The Russian Socio-Ecological Union considers necessary to support not only the energy efficiency of oil and gas industry and large-scale industry. Mechanisms of the Kyoto Protocol should support the development of renewable energy and energy efficiency, must work for the future. In the present circumstances, when the probability of a new, comprehensive global agreement on climate change is negligible, the development of mechanisms of the Kyoto Protocol becomes necessary. Cooperation within the framework of Joint Implementation Projects can bring 40 billion euros of foreign investments to Russia by 2020.