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. Last Updated: 07/27/2016

Mironov Tells Kyoto Experts The World Is Getting Cooler

MTSergei Mironov
ST. PETERSBURG -- It was a failure from the start. Russia's biggest conference on the Kyoto Protocol, which aims to fight global warming, began with a speech from a top official who denied that global warming even exists.

"In reality, the scientific basis for the protocol is fairly weak," Federation Council Speaker Sergei Mironov told a crowded opening session of the two-day conference Thursday, which drew more than 200 environmental experts and carbon market participants from around the world. "In the opinion of many experts, the emission of carbon dioxide into the atmosphere does not have any effect on the climate."

On this point, Mironov stands on the fringes of global scientific opinion. A growing consensus has formed among top scientists and politicians, who have been warning governments to reduce the amount of greenhouse gases being spewed into the atmosphere. The Kyoto Protocol, first signed in 1997, created a system of financial incentives for doing this.

Although Russia ratified Kyoto in 2004, the government now looks to be reneging on its commitments. Mironov's speech made that clear.

In fact, a process of "global cooling" is now taking place, Mironov argued, citing several obscure Russian studies to prove it. At one point, he referred to the warmly colored paintings of 16th-century Dutch masters as evidence that temperatures were indeed higher back then. The remark drew as many frowns as chuckles from the crowd.

At the end of the session, Mironov hurried out without opening the floor to questions. Though several other state officials were invited, he was the only one to attend the conference, which was held at the St. Petersburg State Mining Institute, where President Vladimir Putin earned his doctorate in 1997.

Most troubling for some of the delegates was the news that the event's chief organizer was not allowed into the country Wednesday.

Jorund Buen, the director of Point Carbon, a leading carbon emissions consultancy, had to fly back to Oslo from St. Petersburg after experiencing "a slight visa problem," said Christian Sommer, the Point Carbon analyst who addressed the conference in his place. "We had our Kiev office on the phone all night trying to find a solution," said another Point Carbon associate. "Mr. Buen was very upset."

The mood of the event never seemed to recover from the government's apparent snubs.

"It was clear at that point what the message was," said Martin Kruska, director of 3C Group, a climate change consultancy based in Frankfurt, Germany. "We might as well go home."

Kyoto Off the Agenda

For many delegates, Mironov's speech seemed typical of Kremlin policy. Since it has reasserted its place as an energy superpower, Russia has tended to turn up its nose at environmentalism, except when it comes to foreign oil and gas majors accused of environmental violations on Russian soil, such as Shell at the Sakhalin-2 project.

Kyoto implementation -- which offers the Russian state relatively little money and a bureaucratic headache -- is not exactly high on the agenda, delegates said.

In a 15-minute speech that touched on Kyoto only once, Vladimir Litvinenko, the head of the mining institute and a government energy adviser, said Kyoto implementation would "threaten the independence" of the oil and gas industry.

"It means we will have to answer for the right to refine our own fuel, to create carbon emissions. ... This creates an instant increase in our expenditures," Litvinenko said.

For political reasons, Russia agreed to ratify Kyoto in 2004 after seven years of firm refusals. The change of heart was linked to Russia's ongoing bid to join the World Trade Organization. It was reported at the time that the European Union, in exchange for supporting the bid, wanted Russia to ratify Kyoto, which was then at risk of failing due to a shortage of signatories.

Another factor seems to have been tensions with the West over the ending of the Beslan hostage crisis in September 2004, and Putin's subsequent decision to end gubernatorial elections. Amid an outcry in the West against Moscow's heavy-handed tactics in Beslan and concerns over democracy, Russia six weeks later ratified Kyoto in an apparent effort to restore its image.

Now, however, there are no political incentives to actually implement the accords. "They have lost their value in negotiations," said Yuji Mizuno, senior policy researcher at the Institute for Global Environmental Strategies. "If Mr. Putin or the next president of the Russian Federation can use [Kyoto] as a political tool, only then will we see some progress."

The Kyoto Protocol, based on the good faith of its participants, does not punish nonimplementation.

The main way for Russia to follow through on its commitments is to participate in the global carbon market. At least financially, the government does not have a lot to gain from this, even though it is the largest potential supplier on this market, where permits to emit greenhouse gases are bought and sold.

The market was created under Kyoto to offset the amount of these gases being released into the sky by everything from cars to power plants. Studies show that their concentration is now at the highest levels in history, threatening to cause untold damage to the planet by raising temperatures around the world.

Making Polluters Pay

Under Kyoto, a project that reduces these gas emissions - by patching leaky pipelines or installing more efficient machines, among other methods - can qualify for carbon reduction credits.

Each carbon credit represents a 1-ton cut in carbon dioxide emissions.

Once certified, these credits can be sold for $5 to $15 each on the global carbon market, and the buyer can use them as a permit to emit 1 ton of carbon dioxide elsewhere in the world. The most likely buyers are from European Union countries, where polluters must pay fines if they do not have enough carbon allowances.

In this way, Kyoto potentially makes it more expensive to emit harmful gases, hitting polluters in the pocket and encouraging them to clean up their act. It also encourages richer countries to fund projects in developing countries, where it is cheaper and easier to reduce emissions and produce the valuable credits. Today, the world carbon market is worth nearly $30 billion.

According to most estimates, Russia has the potential to produce hundreds of millions of carbon credits per year, unlocking a multibillion-dollar industry and helping to slow global warming.

"Already there are 24 projects in the works in Russia, and a few are already showing emissions reductions," Vladimir Liktionov, a lawyer at Norton Rose, said on the sidelines of the conference. "So what you have now is all these global firms sitting around waiting for state approval. If they get it, the payoff will be huge."

Most of the cash from credit sales would go to lawyers and brokers on the carbon market, but the biggest gains from Kyoto go to the environment.

Projects to stop the flaring of billions of cubic meters of natural gas, capture methane gas released by landfills, and create waste-water treatment systems, can all be financed, along with many others, simply by selling the carbon credits they produce, said Jan-Willem van de Ven, head of the carbon credit fund at the European Bank of Reconstruction and Development.

None of these projects would happen otherwise.

But if the Kremlin withholds its approval, all the carbon credits already produced in Russia would be worthless under the laws of the carbon market. The firms producing them by lowering emissions in cities such as Arkhangelsk, Murmansk and Khabarovsk would then cut their losses and go elsewhere, leaving Russia either to ignore the problem or to deal with it alone, and at a much higher price, in the future.

"The private sector is really turning away from Russia already. They are tired of waiting [for approval], and are turning to countries like China and Ukraine ... [that] already have the approval mechanisms in place," said a United Nations envoy to the conference, who asked not to be identified. "Time is really ticking if Russia wants to get on board."

The laws set up under Kyoto only run through 2012. Talks are under way about how initiatives will move forward beyond that date, and many believe that the next phase of implementation will be a lot less favorable to Russia.

The original Kyoto accords, which now have 160 signatories, gave former Soviet states a big edge. After the Soviet collapse many industries ground to a halt -- and so did the smokestacks that were pumping greenhouse gases into the atmosphere. By default, therefore, Russia appeared to achieve major emissions cuts in the 1990s.

Kyoto calculated emissions from exactly this period -- an enticement that allowed Russia to join without having to reduce its emissions at all. Indeed, even though it is one of the worst polluters in the world, Russia is allowed to emit more greenhouse gases under Kyoto than any other nation. Most others, especially developed nations such as Japan, Australia and EU members, were obliged to reduce emissions by 5 percent, a goal that has proven tough to reach.

Kyoto "bent over backwards to get Russia to participate," said Marcel Hanakam, 3C Group's senior project manager for Russia and the CIS. "It was given the largest surplus of [emissions] allowances that it can sell to other countries."

Window of Opportunity

In recent years, the treaty's other signatories, especially among developing nations, have begun to cry foul over the unfair advantage Russia enjoys. Their lobbying power is growing, and the treaty's favoritism toward Russia and the former Soviet Union has become hard to ignore. So the next Kyoto round is expected to get much tougher on Russia.

"There is no guarantee of carbon credits being available as a system after 2012," said Jesse Uzzell, regional manager of MGM International, a brokerage on the carbon market. "The window of opportunity is closing."

To take advantage of this window, Russia would have to write letters of approval for Kyoto-based projects, and set up a government department to certify the carbon credits such projects produce.

Given Mironov's speech, many delegates saw hopes for this outcome fading away.

"It could happen almost overnight," Uzzell told the conference. "But I am not so optimistic."