Alexander golub

Russia is an important player in the international effort to address climate change. Its share in global carbon dioxide (CO2) emissions declined from about 11 percent in 1990 to about 6.4 percent in 2003.1 Despite the sharp decline, Russia remains among the world's largest polluters, ranking third in the world after the United States and China and before Japan and India. This chapter presents the history of Russian climate policy since the Kyoto Protocol was adopted at Conference of the Parties (COP-3) until the present day.

This chapter also presents an analysis of the driving forces behind Russia's CO2 emissions and offers discussions on future emissions scenarios. Until now there were no specific incentives to reduce carbon emissions. Any improvements in carbon efficiency were the result of general economic reforms and the integration of Russia into the world economy. Nevertheless, after Russia recovered from its economic crisis, carbon emissions grew four times more slowly than its gross domestic product. Russia will definitely meet its Kyoto target and, with high probability, will be able to supply nearly 3 billion tonnes of CO2 allowances to the international carbon market, especially as Russia's carbon emissions will remain below its 1990 levels.

Russia holds about a third to a half of the world's natural gas reserves, has abundant coal resources (about 20 percent of the world's reserves), and large crude oil resources (10 percent of the world's reserves). Thus Russian climate policy, combined with its energy and export-import policies, will significantly influence its long-term carbon emissions levels. As for the near future, the progress of Russia's climate policy will, to a large extent, determine the success or failure of the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC).

Since ratified by Russia, the Kyoto Protocol has entered into force; Annex B countries (except Australia and the United States) now face the challenges of its implementation. For the European Union (EU), Japan, and Canada, whose carbon dioxide emissions are expected to rise above Kyoto targets, the major challenge is how to close the gap between actual emissions and emission targets. According to various projections, the cumulative shortfall for the five-year commitment period could be equivalent to 3 billion to 5 billion tonnes of CO2. Kyoto's flexible mechanisms, especially emissions trading, are options that could be used to establish the balance.

Russia and Ukraine have the reserve capacity to supply the amount of required carbon allowances and, therefore, appear as essential to the compliance reserves of Annex B countries. In the first Kyoto commitment period, 2008-12, Russia alone will have a large enough surplus carbon allowance to cover the deficits of the other Annex B countries just mentioned. To be a player in the carbon market, Russia should build institutions for managing its carbon emissions budget. Russia made some progress in this field but is still far from being ready to meet all the necessary conditions for participation in emissions trading as stipulated by the Marrakech rules adopted at the COP-7.2 Despite the fact that Russia is an obvious beneficiary of the Kyoto Protocol, it took the country six years to ratify it. After U.S. withdrawal from the protocol, Russia's ratification became the primary bargaining tool in negotiations with the European Union over Russia's entrance into the World Trade Organization (WTO). The debates about the ratification decision best illustrate the controversies among Russian climate policymakers. Russia faces a big challenge to overcome these controversies.

Another and perhaps more important challenge is for Russia to pursue a macroeconomic policy optimizing the role of the energy sector in its economy. Energy resources already play a critical role in the Russian economy. High oil prices in the world market were one of the important factors contributing to the economic growth that started after the financial crisis in 1998. Obviously, Russia will use these abundant energy resources to its advantage. The question then becomes how Russia plans to reconcile the management of these resources with the demands of the Kyoto Protocol.

In this chapter the history of Russian climate policy is presented, the forces that contribute to carbon emissions in Russia are analyzed, and finally some insights into the future of carbon emissions are offered. Alternative scenarios for Russia's future carbon dioxide emissions are proposed, which argue that there is great potential for Russia to combine economic growth with carbon limits.

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