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Russia and the Kyoto Protocol: Political Challenges

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Russia and the Kyoto Protocol: Political Challenges March 2004 Russia and the Kyoto Protocol: Political Challenges By Jacqueline Karas Research Fellow, RIIA Summary § Russia has yet to come to a decision on ratification of the Kyoto Protocol. With uncertain, and lower than anticipated, economic gains, internal and political factors will be of critical importance. § Opinion on ratification is divided in Russia. Dominant scientific opinion is deeply sceptical over the treaty. Support comes from big business and some regions. A key issue is who would gain. § The US’s position undoubtedly influences Russia, but there is no evidence of pressure on Russia not to ratify. § Diplomatic efforts by the EU and others to persuade Russia to ratify on global environmental grounds alone are more likely to alienate than engage Russia. § Russia is seeking guarantees of income through sales of emissions allowances and investment through joint projects and concessions in unrelated areas, such as entry into the WTO. § Any decision will reflect the implications for wider foreign policy issues, such as, multilateral versus unilateral approaches, EU expansion and the rise of China and India. § A co-ordinated approach backed by concrete proposals could encourage Russia to ratify. But, Russia also needs to be aware that a prolonged delay could mean it misses out on any potential gain. Updated Background Paper prepared for ‘Russia and the Kyoto Protocol: Issues and Challenges’ meeting held at Royal Institute of International Affairs on 17th March 2004. RIIA Paper March 2004: Russia and the Kyoto Protocol: Political Challenges Introduction With the withdrawal of the US from the Kyoto Protocol, the fate of the treaty now hinges on ratification by the Russian Federation. At the World Summit on Sustainable Development on 3 September 2002, the then Prime Minister, Mikhail Kasyanov, announced Russia’s hope to ratify in the near future1. Since then signals have been mixed and increasingly negative, leaving commentators questioning not just when Russia will ratify, but if they intend to do so at all and, more particularly, why are they prevaricating? Part of the answer is undoubtedly in the economics of the Protocol which means that Russia can no longer expect ‘windfall’ profits from sales of surplus emissions (AAUs) and faces greater competition for Joint Implementation (JI) projects2. But a further key factor in explaining the delay in ratification is politics - internal and external. This paper examines both the internal forces with Russia and international pressures both for and against ratification. It closes with some broad observations of what these suggest for how to move the process of ratification forward. Internal Political Forces Last December’s parliamentary election gave near total control of the Duma and its committees to the pro-Kremlin United Russia party. This, together with Putin’s landslide victory in the Presidential elections on 14 March means that ratification of Kyoto is in Putin’s gift. Putin will not make the decision over ratification in a vacuum - like any world leader, he will absorb information and take advice from a range of sources. The Kyoto Protocol remains a controversial issue among the political forces within Russia and is subject to intense debate. Coming to a decision over ratification in such circumstances presents a particular challenge and the outcome will depend on the balance of forces. The Duma Opinions in the Duma itself on the merits of ratification are currently divided. A WWF assessment following last December’s election suggests that less than a quarter of the Duma positively support ratification, over half consider it possible and just over a quarter are against3. Even so, Putin’s grip on power virtually guarantees a smooth passage of the ratification bill through parliament. Once Putin has ordered the submission of the relevant documents, the ratification process itself could take days to months depending on political will. In January, the Chairman of the State Duma’s international affairs committee announced that the Lower House may hold parliamentary hearings on ratification during the spring4. While such hearings may enhance understanding of the issues involved within the Duma, their main role could be to air differing views on ratification to the outside world and 1 Reuters, 3 September 2002. China, Russia back greenhouse gas pact. 2 Under the Kyoto Protocol, countries can engage in international emissions trading (IET) whereby one country can sell emissions quotas (Assigned Amount Units, AAUs) to another country. In addition, Annex 1 Parties can gain credit for investments in emissions reductions projects in another Annex 1 Party country through joint implementation. In the case of developing countries, project activities come under the Clean Development Mechanism (CDM). 3 Kokorin, A. (2003a), WWF Russia analysis. Presented to side event at UNFCCC COP9, 8 December 2003. 4 Tass, 1 January 2003. State Duma may hold hearings on Kyoto Protocol shortly. 1 RIIA Paper March 2004: Russia and the Kyoto Protocol: Political Challenges establish the terms of agreement. Indeed, such a tactic was used post-September 11 when Putin was able to position Russia as an unconditional ally of the US, while allowing the Duma to spell out what Russia expected in return5. Government departments In the past, serious debate over ratification in Russia has been dogged by apparent antagonism within and between departments6. While a public show of debate between different officials is normal, the disparate positions reflected in statements to the press have tended to reflect the deeply embedded interest of departments concerns and vested interests of the individuals involved7. On 9 March this year, Putin significantly reformed the government’s departmental structure, cutting back the number of Ministries while stripping single issue ministries of their independence8. He also rearranged reporting lines so that, not only the security ministers, but heads of finance, economic development and trade, agriculture and energy and industry report directly to him. The effect of these reforms on departmental perspectives on the Kyoto Protocol is not yet apparent, but could mean a more coherent approach to the issue. Under the March reforms, the Ministry of Energy is merged with the Ministry of Industry, Science and Technology as part of a wider policy objective aimed at diversification of the economy. In the past, the Ministry of Energy has consistently supported ratification, seeing JI as an opportunity to modernise Russia’s ageing infrastructure and to improve energy conservation and the reliability of the energy delivery. It is unclear how the merger may influence this position. The Head of the new department, former deputy prime minister Viktor Khristenko has been vocal in pushing for more time to make a decision9 but also recognised that Kyoto could stimulate Russian growth10. The Ministry for Foreign Affairs is headed by Sergei Lavrov. Previously Russia’s Ambassador to the UN, Lavrov is likely to favour a multilateral approach – but a question must be whether he requires the US to be part of any such approach. His predecessor, Igor Ivanov, initially neutral on the issue, came out in support of ratification last May. But Ivanov’s more recent positions tended to highlight the position of other major countries (read the US and, possibly, China) outside of the process11. Lavrov has recently outlined his general approach to foreign policy in which he stressed the need for continuity12 – if he applies this to Kyoto, then this would suggest continued ambiguity over ratification. The Ministry of Natural Resources historically opposed ratification, viewing the agreement as a restriction on exploitation of nature, but more positive noises have been heard since spring 2003 when two deputy ministers of Natural Resources expressed their support to ratification. 13 How things will change under the new Minister for Natural Resources, Yuri Trutnev, is not clear. Previously governor of Perm Oblast in the Urals – a region generally 5 Lo, B. (1993), Vladimir Putin and the Evolution of Russian Foreign Policy, p.40. Oxford, Blackwell Publishing. 6 Kokorin, A. (2003b), What the Kyoto Protocol means for Russians. Change 64, p.1-5. 7 Ibid . Kokorin, A. (2003b). 8 The Russia Journal, 16 March 2004. Putin’s innovative cabinet line up. 9 For instance Khristienko’s comments in RIA NOVOSTI 26/06/03 that economic examination of pros and cons will take time. 10 Ria Novosti, 14 July 2003. Kyoto Protocol will stimulate Russia’s economic growth, vice premier says. 11 See for example: ABC News Online, 24 January 2004. Russia says pressure over Kyoto delay is unfair. 12 The Russia Journal, 17 March 2004. New minister outlines foreign policy. 13 ITAS-TASS/Dow Jones, 28 April 2003. Russian Min: Government Ready to Sign Kyoto Protocol Soon. Prime-Tass/Russian Journal, 9 September 2003. Ministry says Russian unlikely to ratify Kyoto Protocol in 2003. 2 RIIA Paper March 2004: Russia and the Kyoto Protocol: Political Challenges supportive of ratification (see below) – this might suggest a positive approach. But, equally, Trutnev is likely to be conscious of the potential effects on extractive industries with which that region is well-endowed. Roshydromet14 is subsumed into the Ministry of Natural Resources and has generally voiced support for ratification, but lobbied hard for further funding to implement the Protocol. The most serious opposition to ratification comes from the Ministry officially nominated to lead the ratification process – the Ministry of Economic Development and Trade (MEDT). The Minister for MEDT continues to be German Gref. MEDT was an early supporter of ratification but turned against it in early 2002 as it became clear that major emissions reductions projects would go to the Ministry of Energy. Gref is suspected of holding back moves to ratify the Protocol last summer. After pressure from the President’s Office last year, MEDT toed the official line and Muhamed Tsikhanov has been at the forefront of highlighting that the decision on ratification is still to be made.
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