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Polluters Join Call for Russia to Ratify Kyoto Pact

Hoping for billions of dollars in emissions credit deals and foreign investment, industrial giants lobby for the global warming treaty.

September 05, 2003|Kim Murphy | Times Staff Writer

MOSCOW — It came as a surprise to no one when Greenpeace held a protest here in June over Russia's failure to ratify the Kyoto Protocol, an international treaty that aims to combat global warming by requiring countries to reduce their greenhouse gas emissions. Environmental groups all over the world have gone to battle for the measure.

In the last few months, though, an unexpected set of advocates has taken up the fight here: polluters.

As Russia nears a decision on whether to ratify the agreement, a batch of the nation's industrial giants -- from huge gas and electric companies such as Gazprom and United Energy Systems to Russian Aluminum, big steel mills and metal smelters -- quietly has begun lobbying for ratification. Attracted by the promise of billions of dollars in foreign investment and emissions credit purchases that could revamp Russia's aging industrial base, the companies also are offering to help pay to administer the program once it's in force.

"The fact is, the more people learn about the Kyoto Protocol and understand what it means, the more advocates for ratification there are in this country.... If in the past it was mostly the Cabinet or experts, today there are advocates among big Russian businesses and corporations too," said Sergei V. Vasilyev, head of the newly formed National Carbon Union, a partnership of leading businesses pushing the merits of the accord in Moscow.

Whether the protocol takes effect at all rests on Moscow's decision. A certain number of major polluters must participate, and with the U.S. having opted out, the only chance the treaty has is if Russia -- the world's third-largest polluter -- opts in.

Kremlin officials say there are "no political obstacles" to ratification and expect a final decision soon.

"For Russia to join the Kyoto Protocol at this point is not a political question. It's a question of legal principles and technical questions," Deputy Foreign Minister Yuri Fedotov said in an interview this week. "Russia is deeply convinced the Kyoto Protocol does not contradict its national interests."

The 1997 accord forged in Japan, which has been ratified by 113 countries, sets targets to reduce so-called greenhouse emissions from 1990 levels by at least 5.2% before 2012. The United States, which leads the world in carbon-dioxide emissions, dropped out after the Bush administration expressed concerns that mandatory emissions reductions could hurt the economy. China, the second-largest emitter of greenhouse gases, and the European Union ratified the accord in 2002.

Russia, however, has dallied for more than a year, and there is concern that further delay could slow the political momentum needed to see the protocol through to its target start date of 2008. "The train is taking off within the next several months. The only question is whether Russia gets on the train or not," Victor Danilov-Danilyan, a former ecology minister, said Thursday. "Ratifying Kyoto a year from now would be equivalent to buying a ticket for a train that has already left the station."

Russia may have an easier time meeting its emission-reduction targets than other countries. Much of the U.S. and Europe already have modernized their industries to some extent, but Russia is operating many of the gas-belching dinosaurs it was running 15 or 20 years ago.

"If you set out to save Europe by reequipping a plant there, you would have to spend an enormous amount of money to achieve a significant level of reduction, whereas in Russia, an enormous savings [in gas emissions] can be realized by switching to technologies that were not even new in the early 1990s," Danilov-Danilyan said.

Another key factor is the selection of 1990 as the base year for measuring greenhouse gas levels. "It was exactly in 1990 that the [former] Soviet Union had the highest levels of emissions of greenhouse gases in the entire history of its existence," Danilov-Danilyan added.

From an economic standpoint, that is crucial. The protocol allows for the sale of emissions-reduction "credits" and joint-investment projects to help install new emissions-reduction equipment. Russia is likely to find it easy to surpass the Kyoto requirement, thereby generating pollution credits. It stands to earn billions of dollars by selling those credits to countries that cannot fully meet their own emissions-reduction targets.

Danilov-Danilyan estimated that Russian businesses could attract $1.2 billion a year in joint investment and sell as much as $800 million in credits within the first three or four months of the accord's implementation.

Many Russian businesspeople see the value of luring foreign investors into retooling Russia's old industries within the framework of Kyoto credits and joint-investment projects.

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