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Russia govt shake-up stalls Kyoto scheme approvals

MOSCOW (Reuters) - Russia has not approved any projects to cut greenhouse gases under the Kyoto Protocol due to a reshuffle of government ministries by Prime Minister Vladimir Putin, Russia’s top Kyoto official said on Thursday.

Smoke billows from the chimneys of a power station in southern Moscow, December 19, 2006. REUTERS/Alexander Natruskin

Although six months have passed since applications were invited, none have been approved, the official, Oleg Pluzhnikov, told Reuters.

Under the United Nations scheme, investors can sell emissions cuts to other industrialized nations, which need them to meet their own commitments under Kyoto, known as joint implementation (JI).

“We have not accepted any of the proposals... The government is now getting organized. This is a normal process,” said Pluzhnikov, the head of the ecology arm of the economy ministry.

Asked the reason for the delays and how long they would last, he said: “This is not a question for me but for the prime minister. It is the prime minister who is shaping the government.”

“It is not my place to say how long this will take,” added Pluzhnikov, who is also Russia’s representative at the U.N.’s Joint Implementation Supervisory Committee on Kyoto.

After his second term as president expired, Putin took the premiership on May 8, and immediately announced a major shake-up of the government. The portfolios and staff of several ministries, including Pluzhnikov’s, were reorganized.

In Russia, there are around 80 Kyoto-based projects now under development, funded by tens of millions of dollars from foreign investors who have waited almost three years for the government’s green light.

Putin’s spokesman, Dmitry Peskov, said the situation would be resolved soon, but declined to give a specific timeframe.

“This is not expected to have a negative impact on Kyoto implementation,” Peskov said.


A vital advantage of the Kyoto accords, an international agreement to fight global warming, is that they encourage investors to pay for greenhouse gas reductions in developing and former communist nations including Russia.

But without letters of approval from Pluzhnikov’s ministry, the emissions cuts achieved in Russia cannot be sold into the 40 billion euro ($62 billion) global carbon market, where the emissions reduction units, or ERUs, are traded.

After two years of delays, Russia agreed to accept applications from projects on January 29. It said in March it would apply strict guidelines.

As of May 4, the economy ministry had received 10 applications, one of which has been rejected, with the rest pending approval, according to the ministry’s Web site.

Core Carbon Group, a Denmark-based investor which filed four out of the 10 projects in March, has received no reply from the ministry, said its vice president in Russia, Artur Lokomet.

“The focal point (for Kyoto questions) remains the economy ministry. As far as I know, that hasn’t changed,” said Lokomet.

Investors generally remain confused as officials have sent mixed signals on their willingness to approve Kyoto projects and on Russia’s commitment to a successor climate treaty.

Current commitments under Kyoto last until 2012. Investors like Core Carbon, in which Merrill Lynch holds a minority stake, must get them approved before the end of the round or the reduction credits they create may be worthless.

A new Kyoto round is now being negotiated and it is unclear whether the mechanism for creating and selling these credits will be a part of the new accords.

“At this point, the ministry is paralyzed. They are waiting for an order from up high that will tell them they can go on with their work,” said a carbon market participant who asked not to be named.

Editing by Anthony Barker