The New York Times today has a nice piece explaining how Russia is milking Europe under the Kyoto scheme (could the Grey Lady be setting herself up for a reversal?). Salient excerpts include Russia’s manifestation of Enron’s business plan (and Kyoto advocacy) before their other schemes came crashing down on them:
“Gazprom, the Russian energy giant, has made handsome profits selling natural gas to Europe. Now the company is positioning itself to make even more money, this time from the effluents from all that gas it sells to Europe. Gazprom announced Tuesday that it is selling carbon dioxide emissions credits that companies in the European Union need in order to burn Gazprom’s fuel. Gazprom’s effort is part of a major push by Russian energy companies, already the world’s largest exporters of oil and natural gas, to become major players in the growing market for carbon credits. As a country, Russia possesses the credits in abundance under the Kyoto Protocol on climate change and hopes to transfer those benefits to its companies.”
This next paragraph reveals why Russia played the decisive role in ensuring Kyoto would go into effect in the first place — after coquettishly toying with Europe and finally settling for the bauble of EU support of Russia’s bid to join the WTO — and why it will do everything in its power to ensure something called “Kyoto” survives past its scheduled expiration date of 12/31/12:
“In 2004, when Russia ratified the Kyoto Protocol, officials here estimated Russian companies could attract $6 billion to $9 billion in investments into emissions-reducing technologies. In total, Russia can reduce emissions under the Kyoto Protocol by two billion to three billion tons of carbon dioxide by 2012, according to government figures. At current prices, the total value for Russian carbon credits could be between 30 billion and 45 billion euros, or about $40 billion to $60 billion. But if negotiations to extend the Kyoto Protocols collapse, carbon credits could be worth nothing.
So Russia will ride to the EU’s political rescue, yet again, to its own very great enrichment at Europe’s expense. Remember that it was only Russia’s ratification of Kyoto that allowed the pact to go into effect in the first place due to the peculiarities of Kyoto’s requirements (ratification by at least 55 countries representing at least 55% of covered countries’ GHG emissions in 1990, unattainable if both the US and Russia refused to ratify). Last year in Brussels, former Prime Minister Mikhail Kasyanov laughingly assured me that extracting the WTO support was indeed Russia’s approach, if never publicly acknowledged, offering knowing chuckles when I probed about their future intentions followed by a berating for asking so many silly questions about such a meaningless issue that is joke to us!–a moment that allowed me to glory in the revelation that my cynicism does not go un-affirmed.