Carbon-credit dispute threatens new climate deal

By Philip P. Pan
Monday, November 30, 2009; A11

MOSCOW -- Russia is on track to far exceed its targets for reducing greenhouse-gas emissions under the Kyoto climate-change treaty, but its success could derail efforts to reach a new accord against global warming, according to officials and analysts following the negotiations.

At issue in the thorny dispute is the huge surplus of carbon credits that Russia -- the world's third-largest producer of energy-related greenhouse gases -- is amassing by keeping emissions under generous 1997 Kyoto Protocol limits. The Kremlin has insisted that the credits be carried over into a new agreement, but environmentalists say that would cripple any treaty by making it much cheaper for countries to buy credits than cut emissions.

"You've got an elephant in the room that nobody is paying attention to," said Samuel Charap, a Russia scholar at the Center for American Progress in Washington, arguing that the Obama administration needs to take up the issue with Russia's leaders.

The dispute is unlikely to be settled when global leaders meet next month in Copenhagen for an international summit on climate change, and Charap and others warn that Russia's hoard of credits could allow it to play a last-minute spoiler in the talks. "If you want an ambitious agreement, then Russia's potential resistance can be extremely damaging," he said.

When the Kyoto Protocol expires in 2012, Russia is expected to post the largest absolute drop in emissions from 1990 levels of any of the countries that signed the treaty. But the decline is almost entirely the result of the 1991 collapse of the Soviet economy rather than environmental measures by the government. Critics say Moscow doesn't deserve to keep its carbon credits because it didn't earn them with any special effort.

Russia says that how its emissions plunged is irrelevant. What matters, its negotiators say, is that the reduction was real and substantial -- large enough to cancel out the rise in emissions in the United States over the same period. They portray the issue as a matter of fairness and national pride, often linking the emissions decrease to the severe economic hardship that the country suffered in the 1990s.

"It may not have been intentional, but we went through very difficult times and paid a high price for this reduction," said Igor Bashmakov, director of the Center for Energy Efficiency in Moscow who has advised the Kremlin on climate-change policies. "We've already done it, while other countries are just talking about it."

He said it is important to carry over Russia's carbon surplus to recognize its contribution to the global effort and establish a "strategic reserve" of credits that would allow Russian leaders to commit to further emissions cuts with confidence.

Like the world's developing nations, Russia says it needs to pursue rapid-growth policies that raise emissions because its living standards lag behind those of wealthier countries. While emissions are down 35 to 40 percent since 1990, they have climbed nearly 15 percent since 1998.

In June, Russia offered to cap emissions at no more than 10 to 15 percent below 1990 levels by 2020, a modest goal widely criticized by environmental groups because it would have allowed an acceleration in emissions growth. But European leaders said this month that President Dmitry Medvedev had signaled behind closed doors a willingness to commit Russia to staying 20 to 25 percent below 1990 levels by 2020.

To meet that new goal without slowing economic growth, Bashmakov said Russia must follow through on ambitious plans to improve energy efficiency and expand its use of renewable energies. Because that task is so difficult, he said, Russia needs to keep its carbon surplus as a backup.

But Vladimir Slivyak, co-chairman of the local environmental group Ecodefense, said Russia should set a more challenging target -- maintaining current emissions levels through 2020 -- and give up its carbon surplus. "We don't need it, and it doesn't help cut emissions," he said.

By using 1990 greenhouse levels as the baseline, the Kyoto treaty in effect gave a free pass to Russia and other former Soviet bloc countries because emissions from their diminished industries were already far below that level when the pact was signed in 1997.

Under Kyoto's carbon-trading system, a country having difficulty meeting its emission-reduction goal can buy credits from another country that has cut emissions beyond its target. In theory, the total global reduction would remain the same. But the generous allowances granted the former communist nations created what critics call "hot air" in the system -- credits not associated with any new reductions.

Ned Helme, director of the Center for Clean Air Policy in Washington, said that if Russia is allowed to keep its surplus, Poland and other Eastern European countries may insist on doing so as well -- and the European Union is opposed to that.

The Russian surplus is projected to grow to 5 to 6 gigatons of carbon dioxide by 2012, and other Eastern European nations could bring the total surplus of credits to 7 to 10 gigatons, said Anna Korppoo, senior researcher at the Finnish Institute of International Affairs. Carrying over the surplus "would challenge the environmental integrity of the pact" by sharply increasing global emissions, she said.

Sergei Tulinov, a member of the Russian negotiating team, said it is too early to discuss the surplus because it is unclear clear what kind of carbon-trading system would be established by a new treaty. "The issue is very important to us, but constructive discussion is only possible if there's agreement on the general elements of the regime," he said.

Russia has also demanded that a new treaty recognize the role that its vast forests play in absorbing carbon emissions. Environmentalists are skeptical, questioning official statistics on the size of Russian forests and warning that unpredictable forest fires could quickly upset calculations.

But George Safanov, director of the center for environmental economics at Moscow State University, said the request represents a chance for cooperation with the United States, one of the few other countries with sizable forests of the type that can absorb emissions. The two countries could work together to draft rules to preserve and promote better management of the forests, he said.

Copenhagen climate failure blamed on 'Danish text'

Drip by drip, the full story is emerging of last December's global diplomatic debacle in Copenhagen, when instead of setting the world on a new low carbon path and tackling climate change, 130 world leaders ended up with a weak deal and no prospect of a binding agreement for another 18 months.

The latest revelations come from the man at the very heart of the debacle, UN climate chief Yvo de Boer. Normally the model of a discreet and guarded international bureaucrat, his confidential letter of explanation to his colleagues, written only days after the meeting ended, displays a mix of bemusement, clarity and exasperation. "How could several years of negotiation and high level diplomacy be allowed to end up this way?", he asks. The letter appears in a new Danish book by journalist Per Meilstrup.

His letter puts the blame squarely on Danish PM Lars Løkke Rasmussen and his presidency of the summit. He identifies the war which had been going on between Rasmussen's office and Danish climate chief Connie Hedegaard's team in the energy ministry. Hedegaard stood down halfway through the summit.

The key event, he suggests, was Rasmussen's draft text. This, known widely as the "Danish text", was due to be wheeled out just when the talks reached a deadlock, as they were bound to do. The trouble was, implies De Boer, the text was clearly advantageous to the US and the west, would have steamrollered the developing countries, and was presented to a few countries a week before the meeting officially started.

De Boer, the experienced diplomat, could see the Danish text it would be a disaster and says that the UN tried desperately to stop it but failed. Within days the worst had happened. The text had been leaked to the Guardian, put on the internet and had outraged the 157-odd countries who had not seen it. From then on, the meeting was polarised.

"[the Danish text] destroyed two years of effort in one fell swoop. All our attempts to prevent the paper happening failed. The meeting at which it was presented was unannounced and the paper [was] unbalanced," wrote De Boer.

But De Boer much further, describing the diplomatic abyss that was opening up as the "most un-transparent backroom dealing I have ever seen" and admitting for the first time that having 130 or more heads of state at the meeting was a dreadful mistake.

But also leaked to Per Mielstrum, was the final Danish text, reworked after the leak to the Guardian. This was the Danish government's last-ditch attempt to put the talks back on track. It was due to be tabled on the last Wednesday of the summit, but by that time it was too late. According to Mielstrum, who interviewed most of the leading players, Denmark had by then lost the trust of rich and poor countries.

Mielstrum says: "The developing countries did not want to negotiate a text, which they, tactically or honestly, said would be "just another Danish text" like the one leaked to the Guardian in the beginning of the summit. Denmark's closest allies from the US, the UK and the EU - Stern, Miliband and Carlgreen of the EU - also rejected the tabling. The three had a meeting with the presidency in the evening, where they warn against tabling the text.

"This was called "the fatal wound" in the Danish delegation, and one official said: 'Our friends abandoned us'. The text had been prepared through more than a year and had cost enormous amounts of energy in the Danish government. It was the jewel in the crown of the presidency's strategy - but was never used," said Mielstrum.

The irony, he says, "is that the text is quite good and balanced. If it had been presented and been the basis for negotiations from Wednesday and on, it might actually have led to a significant and successful outcome of the [summit] and a much stronger outcome than The Copenhagen Accord."

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