New “Kyoto” projects in Russia

O.Podosenova

In the end of January, the Ministry of Economic Development of Russia approved three new "Kyoto" projects. These projects will be implemented in the North and in the Far East of Russia, and will add about 10.5 million tons of saved CO2-equivalent, which is about one sixth of the amount initially planned by the Government for the third round of "climate" plans implementation.

The latest 'Kyoto' projects registered at the Ministry of Economic Development earlier this year were announced by the Savings Bank, the Russian operator of carbon units, for the third call for proposals which started in August 2011. However, the new edition of the Government Decree regulating the mechanism of joint implementation in Russia abolished competitive procedures, and all projects were considered under the new rules.

The largest of the three projects approved by the Ministry of Economic Development was submitted by "Gazprom Dobycha Urengoy LTd." The application involves reduction of 6.16 million tons of CO2-equivalent due to utilization of associated gas in the Urengoy gas condensate field. The second project with "carbon intensity" of 3.3 million tons will be implemented in the course of modernization of the Khabarovsk CHP-1. The volume of emission reductions envisaged in the project of waste biomass utilization at the Arkhangelsk Pulp-and-Paper Mill is 1.02 million tons of CO2-equivalent.

Eugeniya Moskaluk, the head of environment department at the Arkhangelsk PPM, says: "Participation of APPM in the joint implementation mechanism is aimed at obtaining additional funds required to implement the new" carbon "projects. In 2011 we started the project "Installation of new multi-fuel boiler with boiling layer for co-combustion of waste wood and sewage sludge." We plan to finance it partially by funds received from the sale of GHG reductions units obtained during the validity period of the Kyoto Protocol."

Initially, the operator of carbon units has set a limit of 70 million tons of CO2-equivalent for climate projects of the third competition round. The two previous competitions organized by the Savings Bank brought in 33 projects totaling with about 60 million tons of CO2-equivalent.

Thus, the current 10.5 million tons is only one sixth of the amount originally planned for the third competition round. It is likely that the Ministry of Economic Development will soon publish a list of more projects. However, it is evident that changes in consideration of carbon projects have brought improvements: the process of climate projects registration has not been made faster and easier.

This year is the last year possible for Joint Implementation (JI) Projects in Russia. In December 2011, at the international climate talks in Durban (South Africa), the Delegation of the Russian Federation declared that Russia will not join the second period of the Kyoto Protocol (KP). Meanwhile, Russia's "carbon reserve" will become about 6 billion tons of CO2 equivalent by the end of the KP first period. This reserve will be “set to zero” in case of non-participation of the Russian Federation in Kyoto-2. Already now, this country has about 90 JI projects with a total effect of the order of 150 million tons of CO2, with the estimated amount of funds about 1 to 1.5 billion dollars. The procedural practice for JI projects that is currently implemented at the federal level suggests that there will be no "fast track" for implementation of climate projects. Although, such projects are until now the only option for obtaining investment for "green" upgrades for the majority of Russian regions and companies.