Firms Pressure Russia To Adopt Kyoto Mechanisms

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Two top Russian firms, power monopoly UES and services group Sistema, pressed the government on Monday to pass laws needed to implement the Kyoto Protocol, saying a lack of clarity was endangering environmental projects.

MOSCOW — Two top Russian firms, power monopoly UES and services group Sistema, pressed the government on Monday to pass laws needed to implement the Kyoto Protocol, saying a lack of clarity was endangering environmental projects.


A year ago, Russia's ratification of the treaty, which seeks to stabilise emissions of greenhouse gases, was greeted with jubilation by green groups, who saw it as a key stepin battling global warming.


But since its ratification, which allowed it to come into force worldwide, Russia has done little to create the mechanisms needed to implement its terms.


Unified Energy System (UES) chairman Anatoly Chubais and Sistema head Vladimir Yevtushenkov, two of Russia's most influential businessmen, have written to Prime Minister Mikhail Fradkov to ask for action, the two companies said in a joint statement.


UES subsidiaries signed Russia's first Kyoto-linked contracts in June but said the lack of progress could lead its Danish partner -- the Environment Protection Agency -- to cancel the deal.


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"If, by the end of October this year, the contract is not approved by the Russian government, it will be severed by the Danish side, which will undermine foreign investors' trust in the Russian greenhouse gas market," the statement said.


Unlike most other countries, Russia has substantial spare emissions capacity since its pollution quota was set at the 1990 level. Since then the post-Soviet economic collapse has devastated industry and cut pollution by as much as 30 percent.


As a result, some Russian firms see Kyoto's terms, which allow companies to invest to cut greenhouse gases in another country and book emission savings as cuts for their own country's quotas, as an easy way to gain cheap investment.


"Russian business is worried about the rates of preparing the rules and procedures for such projects, especially for joint implementation projects," said the statement.


"Our companies' opinion is that the supply of Russian quotas in the international market has to be strongly linked to obligations to cut the amount of emissions with innovative energy technology, and the modernisation of energy equipment."


Russia is also obliged to implement mechanisms to allow market trading of pollution quotas, but is yet to do so.


European Union companies needed to meet government limits on carbon dioxide trading from the state of this year, and a quota market is now in place which some estimate is already worth up to 330 million euros a month.


Source: Reuters