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Russia to make billions for kyoto agreement { April 4 2006 } Original Source Link: (May no longer be active)
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Russia to Have Key Kyoto Trade Rules Ready by July
RUSSIA: April 4, 2006
MOSCOW - Russia will have key rules ready by July that will allow foreign firms to invest in the country under the terms of the Kyoto Protocol, a top Russian official promised on Monday, reassuring potential investors.
Foreign companies will be able to invest in projects to reduce carbon dioxide emissions in Russia and can use the credits to trade in markets such as the European Union's CO2 trading scheme, which was launched last year.
Russia could make vast sums -- as much as US$11 billion according to World Bank estimates -- from the Kyoto pact. The pact aims to stabilise emissions of greenhouse gases and allows firms to invest in foreign countries and book cuts in the gases, achieved in those countries, as their own.
But since Russia ratified the treaty in 2004, it has made little progress on implementing the mechanisms necessary to give foreign firms the regulatory framework that would assure them their investment would be safe.
Andrei Sharonov, a deputy economy minister and Moscow's pointman on Kyoto, said a decree regulating the transfer of emission quotas to foreign investors under so-called Joint Implementation (JI) schemes would be ready by the end of July.
That, coupled with a list of the emitters of greenhouse gases to be ready by 2007, would lay the basis for Russia to take part in the carbon market which is heating up as the 2008-2012 compliance period for the Kyoto treaty looms closer.
"The European carbon dioxide futures market is already alive and active. We need to hurry not to miss the moment," he said on the sidelines of a conference on carbon trading in Moscow.
European investors are very keen to invest in Russia -- which has spare capacity because its industry was devastated by the post-Soviet collapse -- for their carbon savings.
Prices of carbon dioxide have risen three-fold since the European Union emissions market was launched in January 2005.
FORGED AHEAD
Russian power monopoly Unified Energy System forged ahead last year and signed contracts to modernise some of its facilities under JI terms, but it is so far alone and the deals have not been confirmed by the government.
Officials have blamed the government's slowness for a failure to get more contracts. Investors at the conference in Moscow welcomed Sharonov's announcement, but echoed a call from UES that the government should pick up the pace.
"This is good news, he basically said they would start to issue letters of approval in June. I do not know if this will be possible but he said it at least, and I have never heard him say it before," said Helmut Schreiber, lead environmental economist from the World Bank's Europe and Central Asia department.
The Bank has US$1.5 billion of funds available for investment in Kyoto-linked schemes, but warned Moscow to act fast because "the window of opportunity is rapidly closing".
Sharonov said Russia wanted to have all regulations ready early enough to let contracts be prepared for the 2008-12 period. He said Russia would have a 3-billion-tonne carbon dioxide surplus, although it would not sell it all on JI terms.
Conference participants suggested Russian officials were beginning to understand the issue, but urged them to hurry so as not to miss their chance.
"Russia and Ukraine can if they like dominate the market on the supply side for emissions trading," said Jurgen Salay, an official from the European Commission's Environment Directorate-General.
Story by Oliver Bullough
REUTERS NEWS SERVICE
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