RUSSIA GETS W/THE PROGRAM

Russia will be making money selling greenhouse gas-releasing fuels AND making money selling credits to offset the emissions. THAT'S TRADING!

Russia takes first step into global carbon market
Gerard Wynn (with James Kilner), May 30, 2007 (Reuters via San Diego Union-Tribune)

WHO
Russia (Prime Minister Mikhail Fradkov), London-based carbon project developer Camco (CAO.L), Arthur Houston, a Russia manager; Russian Carbon Fund, Morten Prehn Sorensen, chief climate change officer;

WHAT
- Russia, having implemented all arrangements but precise valuation of credits, is now one small step away from buying and selling greenhouse gas (GHG) emission credits, a potential multi-billion dollar trade.
- Kyoto Protocol Clean Development Mechanism: industrialised countries can buy carbon credits from developing countries;
- Kyoto Protocol Joint Implementation: industrialised countries can buy carbon credits from each other

WHEN
- All guidelines but the last were put in place May 28.
- Final draft expected June 1.
- UN approval expected by early 2008.
- The credits would apply to the next phase of the Kyoto Agreement, running through 2012.

WHERE
- Credits would be sold for Russian carbon emitting business and industry in the EU carbon market.
- Registry of software for transactions by French firm Seringas.

WHY
- Russia: #1 supplier of oil & gas to Europe, #3 GHG emitter in world; Has credits worth billions to sell in the $30 billion global market.
- Russia’s trading will be according to Kyoto Protocol: Investments in blocking Russian emissions will buy other countries’ permission to emit at home. Example of Russian credits: plugging holes in vast network of gas pipelines which leak methane.
- One estimate of Russian potential: 500 million tons of emissions valued at $5 billion
the network of oil pipelines in and out of Russia (click to enlarge)
QUOTES
- Houston: “If there were 50 steps, we're at step 49…Now we need to know the final text of the decree, on how to apply. We're expecting that to be posted on the Ministry of Economic Development and Trade website over the next week.”
- Abyd Karmali, climate change consultant, ICF International: “This is the big one, it's what everyone's been waiting for for over a year and a half…”
Sorensen: “This is an important step, it's something the market's been waiting for for some time, but one should not be fooled that it takes care of everything…Details needs to be fleshed out, like where applications should be submitted. Markets will want to see it in operation and issued approvals.”
- Shell's Garth Edward: “The government decision is the first step, now they need to operationalise that. The time frame for turning around applications is unclear…”