Bridges Weekly Trade News Digest • Volume 7 • Number 32 • 1st October 2003

Russia Dashes Hopes For Kyoto Protocol’s Swift Entry Into Force

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In his inaugural speech at the World Climate Change Conference in Moscow on 29 September, Russian President Vladimir Putin gave no indication of his government’s intention to ratify the Kyoto Protocol in the near future, dashing hopes for the Protocol’s expeditious entry into force. Proponents of the Protocol had hoped and expected that Putin would have used the conference to announce his country’s ratification. In order to enter into force, countries representing 55 percent of 1990 greenhouse gas emissions must sign on to the Protocol. Russia’s ratification is the key to entry into force, after the US — the world’s largest emitter of greenhouse gases — rejected the Protocol in 2001. Russia has been sending mixed signals, with Prime Minister Mikhail Kasyanov assuring the 2002 World Summit on Sustainable Development that his country would ratify in the "very near future," followed over the past year by contradictory statements by government officials.

Recently, Russian officials have been stressing the need for guarantees on investment and the sale of emission rights in order for the country to ratify. Russia has been expected to benefit financially by selling so called emission reduction credits to other countries, as its emissions have plummeted since the 1990 base year. Most other countries have seen their emissions grow, and developed countries will have trouble fulfilling their Kyoto emission reduction commitments domestically.

Ratification linked to concessions in WTO accession talks

Many observers remain puzzled as to why Russia, which stands to gain financially by ratifying, is stalling, and speculate that Russia may be looking for concessions in other areas, such as its WTO accession negotiations. Putin, in his opening speech, stressed that Russia is "closely studying and examining" ratification on economic and political grounds, giving no timetable for a decision. In response to calls for ratification from, among others, the UN Secretary-General Kofi Annan and UN Framework Convention on Climate Change Executive Secretary Joke Waller-Hunter, Putin said Russia may in fact benefit from a warmer climate, especially in terms of agriculture, acknowledging however that problems elsewhere must be considered. While the statement caused a shockwave among observers, this opinion has been expressed in the context of climate negotiations on a regular basis over the years. Putin also called for further research rather than action on climate change, which mirrors comments made in the US camp. Indeed, some point to pressure from the US as a factor behind the current Russian stance.

Others have suggested that Russian internal bureaucracy and lack of inter-departmental coordination may be holding up ratification, or that Russia — a major oil and gas producer — is worried about potential negative impacts on those markets.

One Russian sceptic, Vyacheslav Nikonov, director of the Politika Foundation, listed a number of reasons to avoid ratification in an opinion piece in the Russian daily Pravda, including the fact that with the US out of the game, Russian gains from emissions trading would be much smaller than earlier projected. Further, the EU created its emissions trading scheme without consulting Russia, and the scheme would not provide Russia with the kind of market it had hoped. In fact, the fairly closed scheme would probably lead to trades being focussed on the new EU member states that would benefit from the influx of money and new technology. Nikonov also pointed to concessions by the EU in the trade area that Russia had hoped for, but that had not been granted: on WTO accession, visa-free entry and anti-dumping investigations. He warned that with a number of uncertainties surrounding the effects of the Protocol on Russia and the potential of the emissions trading market, we cannot "sell our future economic growth for an unspecified price".

At the Moscow climate meeting, the EU, Canada and others were quick to respond and to reiterate their commitment to reducing emissions and to the Protocol. Chris Davies, a Member of the European Parliament said "it must be hoped that this announcement signals a last minute attempt at brinkmanship to extract further financial concessions out of the EU rather than heralding the collapse of the world’s only agreement to curb global warming". Canadian Environment Minister David Anderson remained optimistic, stressing his firm belief that Russia would come on board. According to Anderson, "there’s absolutely nothing in today’s statement to suggest they’re falling back or away from that commitment".

Following the World Climate Change Conference, a ministerial consultation on the way forward under the UN Climate Change Convention is scheduled for 5-6 October in Rome. The next Conference of the Parties will be held from 1-12 December in Milan, Italy.

ICTSD reporting; "Putin Undecided on Kyoto, Snubs U.N. Appeals," REUTERS, 29 September 2003; "EU alarmed as Putin backtracks on Kyoto," GUARDIAN UNLIMITED, 30 September 2003; "Canada to stick with Kyoto regardless: Anderson," CTV, 29 September 2003; "Putin undecided on Kyoto," AFP, 29 September 2003; "The Kyoto Protocol: A Sceptic’s Opinion," PRAVDA, 11 September 2003.