Implementing national GHG emission regulation systems in the form of the market or tax is the leading trend in developing countries now. It combines the intention to provide environmentally comfortable living standards with innovative socio-economic and technological solutions.
The motives lying in the basis of emission regulation system include the intention to use the advantages of leadership in policy and measures of reducing negative impact on climate, adaptation to climate change, reduction of fossil fuels dependence and environment pollution, health improving, creation of ecosystem services evaluation systems.
All the above is very important for Russia which is planning to restructure the national economy moving it to low-carbon one. On 30 September 2013 the Russian Federation Presidential Decree no 752 «On Reduction of Greenhouse Gas Emission» which set a target of reducing emissions by 2020 to 75% of the 1990 level was signed. Since then the Government has started working out the measures aimed at moving the economy to low-carbon development.
Anton Galenovich, the executive secretary of the Ministry of Economy and «Business Russia» joint working group on GHG emission regulation issues, is answering our questions:
Mr.Galenovich, what has become an impulse to the creation of carbon emissions regulation system in Russia?
According to the UNFCCC ratified in Russia in 1994, our country has undertaken an obligation to “take corresponding measures on the mitigation of climate change, by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs”.
As a result of the transition to the market economy and its restructuring, carbon emissions fell so much that no direct regulation measures had been taken to fulfill international obligations.
Ronald Coase (American economist, the Nobel Prize winner for economics) pointed out, that «the fact that State intervention also involves costs means that the majority of externalities should be allowed to exist if we want to maximize the value of production.»
Conventional pattern of state regulators when making decisions on the implementation and development of environment protection measures first of all is to consider the following question: has the problem reached critical level of urgency?
GHG emission growth is followed by the growth of damage with a vast diversity of consequences, multiplying factors. The critical point, when costs of time and efforts of the government are significantly less than the damage caused by inactivity, is either reached or passed. This fact along with international obligations has become an impulse.
What are the first steps of this system?
The new governmental Plan according to which the regulation concept is to be developed by September 2017 was approved. At the moment we have the concept and a draft methodological guideline and recommendations for monitoring, reporting and verification system for GHG emissions. This element though in different forms is necessary in any future regulation system.
As to monitoring and reporting, the matter depends upon entrepreneurs: do they consider it is just another element of environmental reporting or the first step towards reserving the rights for emissions?
Will there be a carbon market in Russia?
Of course there will. It may be created right after the Government receives the authority to limit GHG emissions and after a long way of trial and error, when it eventually turns out that this way of emission regulation is most efficient. The main point is that the market is not a natural phenomenon, it is the fruit of the efforts on the part of business.
There should be new entrepreneurs realizing the value of the carbon market per se as a tool of asset management, the initial equivalent of which might reach 1 billion tones in volume and 1 trillion RUB in value.
Such entrepreneurs are yet to emerge, and the regulation issue is mainly discussed in the context of traditional command-and-control model, which implies that greenhouse gases is just another subset of pollutants to be dealt by the Federal Environment and Natural Resource Supervision.
Should we expect the Eurasian Union united carbon market and its connection with other world markets?
Such a market would be justified in environmental, economic and political terms. Now we are trying to find a way which will lead to this. Creating integrated carbon market depends on the model Russia would choose in the first place and whether there will be a business impulse to create the new market mentioned or not.