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. Last Updated: 07/27/2016

Stemming Climate Change

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At the United Nations Conference on Climate Change that has just concluded in Bali, the world's governments agreed to begin two years of negotiations to replace for the Kyoto Protocol on greenhouse gas emissions. But the tensions between the United States and China over who takes on obligations for emissions will make a solution hard to come by between now and 2009. In the absence of global leadership by the two largest producers of greenhouse gases, could there be a role for Russia, the third-largest producer?

Environmental issues have not traditionally been high on the agenda in Russia. Moscow ratified the Kyoto Protocol, but there is little incentive for Russia to reduce emissions, which were based on the country's 1990 industrial production levels -- very high compared with the ensuing years of post-Soviet decline. Some cities have been rated amongst the world's most polluted. Furthermore, with low domestic energy prices, consumers lack motivation to save energy.

But change is afoot. Russian companies, faced by the challenge of rapidly increasing demand, are investing in more efficient, environmentally friendly technologies. For example, TNK-BP is planning to invest more than $1.5 billion over the next five years to develop associated gas production. RusAl, the world's largest aluminum producer, is investing in energy-saving technologies in its new plant in Taishet near Irkutsk.

International banks funding large projects in Russia are influencing corporate behavior by being ready to refuse finance to companies that present an environmental risk. The European Bank for Reconstruction and Development, with its strategy to promote sustainable energy, focuses project finance on developing renewable sources such as last year's investment into Gidro OGK's reconstruction of hydroelectric plants.

Attitudes are changing too. A recent survey of Russian companies by the World Wildlife Fund showed considerable commitment to the introduction of environmental management systems and standards such as ISO 14001. Consultations with local communities and nongovernmental organizations on environmental concerns by companies such as Unified Energy System are becoming more commonplace. Environmental lobbying can sometimes work, as was shown in 2006 by the rerouting of Transneft's pipeline away from Lake Baikal. Recently President Vladimir Putin even reminded the head of the Sochi Olympic corporation to make sure that environmental issues were properly dealt with during the 2014 Games.

For Russia, climate change presents a host of untapped opportunities. The country has scientists capable of participating in the development of clean technologies. For example, there is groundbreaking work in producing nuclear energy more safely than with traditional methods, and Russian scientists are working on hydrogen technology and nanotechnology, both important in renewable energy. This research could be in fierce demand in both the developed and developing worlds, challenged by how to make clean energy cost-effective and how to reduce emissions without adversely slowing economic growth.

Companies are in fact ready to take action on environmental issues even if the law and public opinion do not necessarily force them to. As elsewhere, they can exert far more influence by taking a position rather than by waiting for an environmental disaster to happen or for governments to decide for them.

If business and governments, both in Russia and abroad, could encourage these new trends and make the most of the competitive advantages of industry and science, there could be real benefits for Russia and the world. Inside the country, such an approach would resurrect research and development that has been underfunded over the past 15 years, and encourage diversification of the economy into high-tech industries.

Over the next two years of negotiations following the Bali conference, Russia, as the only member of the Group of Eight that is also a rapidly industrializing nation, could make a positive impact by leading the commitment to radically cut emissions post-2012. A Russia actively contributing to solving climate change would help diffuse many of the current tensions in the international energy dialogue and accelerate the long-term diversification of global energy sources and the introduction of energy-saving technologies -- two critical components of global energy security.

Russia would thereby position itself as a country not only safeguarding its national interests, but it could also make a significant contribution to the sustainable development of the world for decades to come.

Brook Horowitz is executive director of the International Business Leaders Forum in Russia.