Russia's first JI projects – a step towards combating climate change or new contracts for the oil sector?

Ekaterina Uspenskaya

July 23, 2010: A list of projects, to be carried out in accordance with Art.6 of the Kyoto Protocol was approved by the Ministry of Economical Development of the Russian Government. The list includes 15 of the total of 40 projects submitted for the bidding. The body in charge of conducting the bidding was Sberbank, appointed by the Government as an official carbon operator. The net limit set for the bidding was 30 mln tonnes of CO2 equivalent and the bidding was open for submissions from both GHG emitters and consumers.

As the result shows, most of the 15 winning projects represent the oil and gas sector (such companies as Gaspromneft, Rosneft etc) and their share in expected net reduction is 47%. 19% more belongs to industrial GHG emissions (HFC23 and FS6). Only 16% of the reduction is
allocated for the projects that imply energy efficiency measures implementation in industry, while the big hydro projects hold a 10% share. Out of 10 energy efficiency-based projects only 3 were approved, and the approval rate for renewable energy development project is none!

As mentioned by Michael Yulkin, an independent expert, the bidding wasn't short of surprises:

one of the approved projects was the conversion to gas fuel of the Amur thermal power plant, which was not on the initial applicants list! Furthermore, the expected net GHG emissions reduction by all the approved projects in fact exceeds the officially set limit of 30 mln tonnes.

Russian Social Ecological Union notes that even the de facto GHG emissions reduction limit overdraught will not contribute to any significant improvement of the situation, due to an inert system of the official JI projects approval that has already caused a substantial loss of potential investments. Russia has an estimated JI projects potential that exceeds 240 mln tonnes of carbon
equivalent and could possibly get a 58% total market share of JI projects in the near future.

The first JIP bidding results do not correspond to the Economical development strategy announced by the President of Russia, which prioritizes energy efficiency improvement in industry. The lack of renewable energy projects is just as remarkable. The goal of 4,5%
renewables by 2020, mentioned in the Strategy, clearly shows the underestimation of Russian renewables potential and reflects the stagnation of state support and stimulation mechanisms development for the renewables sector. And of this the bidding results are a good example.

RSEU stands for overall support for energy efficiency and renewables-related projects and initiatives including JIP.