Russia Signs First Kyoto Project, More Seen
Date: 29-Jun-05
Country: RUSSIA
Author: Oliver Bullough
The projects are themselves small as they cost the Danish government 20 million euros ($24.25 million) for a yearly saving of 1.21 million tonnes of carbon dioxide, but are designed to show the potential of Russia for Kyoto investors.
Under the terms of the pact, which assigns countries with pollution quotas in a bid to stabilise levels of the gases that cause climate change, investors can cut emissions in another country and book the savings as their own.
The so-called Joint Implementation (JI) clause is intended to allow emissions cuts to be as cheap as possible.
In this case, Denmark's Environmental Protection Agency invested in Unified Energy System (UES) Siberian subsidiaries Khabarovskenergo and Orenburgenergo.
"These are pilot projects, but we are sure they will be effective... and they will help the government understand the efficiency of this route," said UES board member Yakov Urinson at the signing ceremony.
"Just by modernising existing stations and changing steam turbines to gas turbines would let us reduce... (carbon dioxide) emissions by 90 million tonnes (a year)."
Russia does not have to cut emissions to satisfy Kyoto's demands because it pollutes around a third less than its quota but companies like UES see the pact's mechanisms as a handy way to raise cash.
Plant modernisation could help UES avoid power cuts such as one that blacked out much of Moscow last month, in an embarrassing reminder of the effects of post-Soviet neglect.
Although UES's emissions have collapsed along with the economy since the end of communism, it still emits more than 300 million tonnes of carbon dioxide -- around two percent of total world emissions.
Urinson suggested Joint Implementation projects could help UES improve energy efficiency by almost a third, which could reduce the world's carbon dioxide emissions by more than half a percent.
Other UES officials said they had 20 projects currently out to tender in Europe.
"We have talks with Austria, Belgium, Germany, Great Britain, these are similar projects," said Andrei Gorkov, head of UES's Energy Carbon Fund, which spearheads Kyoto projects.
"The price of these projects in Russia is less than buying quotas (on the open market), this is because at the moment there is a higher risk. But we hope we can make it so the price will not be lower than quotas."
UES has long led the Russian push for Kyoto-linked projects, but other firms including gas giant Gazprom and aluminium firm SUAL have also expressed an interest. Some experts say investment could top $2 billion by 2012.