Washington D.C. will host the first-ever Clean Energy Ministerial on July 19-20, 2010, gathering ministers and official delegations from nearly two dozen governments to collaborate on long-term policies and programs for a global transition to clean energy technologies.  To be hosted by the U.S. Secretary of Energy, Dr. Steven Chu, the Clean Energy Ministerial is an initiative of the Major Economies Forum on Energy and Climate (”MEF”), which is comprised of 17 major developed and developing economies.

In July of 2009, the MEF initiated a Global Partnership to promote the advancement of low-carbon and climate-friendly technologies while simultaneously reducing greenhouse gas emissions.  The MEF requested that the Global Partnership create a set of Technology Action Plans directed to ten clean energy technologies that would address more than 80% of the carbon dioxide (CO2) emissions reduction potential for the energy sector, as recognized by the International Energy Agency (”IEA”).  The MEF also intended for the Technology Action Plans to encourage efforts among interested countries to advance action on technologies such as-

• advanced vehicles
• bioenergy
• carbon capture, use & storage
• cross cutting R&D (i.e., clean energy R&D)
• energy efficiency in the buildings and industrial sectors
• high-efficiency, low-emissions (HELE) coal technologies
• marine energy
• smart grids
• solar energy
• wind energy

In December 2009, the MEF’s Global Partnership released these Technology Action Plans, summarizing the information generated by government experts and describing possible roadmaps to advance the development and deployment of these clean energy technologies.  The Technology Action Plans also propose the foundations for long-term policy commitments that would enable governments and the private sector to speed the adoption of clean energy technologies, as well as the means to overcome current barriers to the adoption of these technologies, such as regulatory barriers and the high costs of adopting the technologies, in pursuit of the common goal of a global, low-carbon economy. 

The MEF’s Clean Energy Ministerial will provide an opportunity to discuss these Technology Action Plans, including the policy obligations needed to accelerate the deployment of clean energy technologies.  The agenda also incorporates specific discussions relating to “Energy Efficiency/Smart Grid,” “Clean Energy Supply,” and “Energy Access” during the Public Forum on July 20. 

For further information about this topic, please contact Akin Gump.

Part III: Efforts to Promote Research and Development of Fast Reactors

Fast neutron reactors (FNRs or fast reactors) which burn uranium more efficiently have a very high energy production rate compared to conventional power reactors.  A fast  breeder reactor (FBR) is designed to produce more plutonium than it consumes as fuel.  According to the Argonne National Laboratory, “the fast reactor can create new fuel and destroy long-lived nuclear waste and plutonium while it produces electricity.”

The first U.S. prototype fast breeder reactor (Enrico Fermi, 66 MWe) operated for only three years and was shutdown for safety reasons in 1972.  U.S. efforts to advance FNR technology have been constrained by several factors, including the high costs of building and operating prototype fast reactors, technical failures of the earliest reactor designs both in domestic programs and abroad, a lack of U.S. public support, and, most importantly, proliferation concerns due to “the plutonium content of the spent and reprocessed fuel.”  U.S. research in the field of fast reactor technology continues, and there are now plans for the “deployment of prototype fast reactors between 2018 and 2025.”  However, the lack of Congressional support and appropriations for advancing FNR technology has been criticized by supporters of nuclear energy.

Currently, Russia is the only country with an operating commercial fast reactor (BN-600, 600 MWe).  According to the DOE Energy Information Administration, this reactor is “regarded as highly reliable.”  France closed its remaining fast reactor (Phenix, 250 MWe, 1973-2009) last year.  Japan has an experimental fast breeder reactor (Joyo, 140 MWt), which has been operating since 1977, and may restart a prototype fast breeder reactor (Monju, 280 MWe) in 2010.  India has a fast breeder test reactor (FBTR, 40 MWt) which has been operating since 1985 and is constructing a prototype fast breeder reactor (PFBR, 500 MWe) scheduled for completion at the same location in 2011.  Today’s critics of plutonium-fueled fast breeder reactors argue that Russia and India’s breeder reactor programs “leave much to be desired regarding the availability of data on reliability, safety and economics.”

Russia’s BN-600 reactor is a sodium-cooled fast breeder reactor (housed at Beloyarsk Unit 3) located at the Beloyarsk Nuclear Power Plant in the town of Zarechny, Sverdlovsk Oblast.  It has been supplying electricity to the Middle Urals power grid since 1980 and “is said to have the best operating and production record of all Russia’s nuclear power units.” A large sodium leak in 1993 was reported to have had “negligible radiological consequences.”  The BN-600 power unit was upgraded and received a license in April 2010 for 15 more years of operation.           

Russia plans to commission the first BN-800 fast breeder reactor (housed at Beloyarsk Unit 4) in 2014.  The new design of the more powerful (800 MWe) reactor offers fuel flexibility (U+Pu nitride, MOX, or metal fuels), enhanced safety, and improved operating costs.

Both the BN-600 and BN-800 reactors will be used in Russia to burn the country’s surplus weapons-grade plutonium as MOX fuel within the framework of the Plutonium Management and Disposition Agreement (PMDA).  According to the bilateral agreement, they will be modified to dispose of plutonium “without creating new stocks of separated weapons-grade plutonium.”

In October 2009, Russia’s Atomstroyexport signed a contract to carry out pre-project work for construction of two power units with two BN-800 reactors in China.  Construction of the first unit is scheduled to begin in 2011.  The contract was concluded with the China Institute of Atomic Energy and with the China Nuclear Energy Industry Company.

Russia also has two lead-cooled fast reactor designs that can be applied commercially and are considered to be more proliferation resistant: the BREST fast reactor of 300 MWe and the Lead-Bismuth Fast Reactor (SVBR) of 100 MWe.   

In 2008, Rosatom and Russian Machines set up a joint venture to design and build a prototype 100 MWe SVBR reactor.  According to an Atomenergoprom presentation, the plan is to build the SVBR-100, test it, obtain licenses, and complete a new nuclear power plant with the SVBR technology by 2020.  In 2009, Rosatom also set up a 50/50 joint venture with En+Group to design and produce a prototype SVBR reactor, as well as to obtain licenses.  This pilot project is a public-private partnership.  According to a Rosatom 2009 press release, the joint venture, OJSC AKME-engineering, is tasked with “completing R&D for the project.”  The SVBR-100 reactor unit is “scheduled to be commissioned around 2019.”

Dr. Ehud Greenspan of the University of California, Berkeley, Department of Nuclear Engineering, suggests that the United States should consider basing an American prototype reactor on the Russian SVBR-100 technology and cooperating with Russia in further developing this lead-cooled fast reactor (LFR) technology. 

Click here to read Part I of U.S.-Russian Cooperation in Nuclear Energy.

Click here to read Part II of U.S.-Russian Cooperation in Nuclear Energy.

For further information about this topic, please contact Akin Gump.

The Importance of the US-Russia 123 Agreement

The Agreement between the Government of the United States of America and the Government of the Russian Federation for Cooperation in the Field of Peaceful Uses of Nuclear Energy (also known as the 123 Agreement) serves not only non-proliferation, but also the commercial interests of both countries.  Signed in Moscow in May 2008 and submitted to the U.S. Congress the same month, the Agreement was withdrawn after the Russia-Georgia military conflict in August 2008.  At the July 2009 Moscow Summit, Presidents Obama and Medvedev issued a joint statement  repeating earlier U.S. and Russian support for the 123 Agreement.  Opposition in Congress to the Agreement has been primarily linked to Russia’s stance on Iran’s nuclear program, particularly its past reluctance to support crippling sanctions against Iran. 

However, in the transmittal message to the U.S. Congress, President Obama noted that the United States and Russia “have significantly increased cooperation on nuclear nonproliferation and civil nuclear energy” in the last year.  The President urged the Congress to give the proposed Agreement favorable consideration because of Russia’s expressed support for a new United Nations Security Council Resolution on Iran, the April 2010 signing of the START Treaty and the Protocol to amend the 2000 U.S.-Russian Plutonium Management and Disposition Agreement, as well as Russia’s support for other non-proliferation initiatives, such as the establishment of an international nuclear fuel reserve in Angarsk, Russia.

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The United States and Russia are leading players in the nuclear energy global market.  Nuclear power accounts for approximately 20 percent of electricity generation in the U.S. and 17 percent in Russia. (Nuclear power is used by 31 countries and accounts for about 16 percent of the world’s electricity generation.)  In absolute terms, however, the U.S. produces five times more electricity from nuclear power than Russia does.  Looking ahead, both countries face a growing demand for electricity and pressure for energy efficiency.  Moreover, their commitment to halting nuclear weapons proliferation in the world gives them an additional incentive to limit the use of materials that could be used for weapons fabrication. 

At present, civilian nuclear cooperation between the United States and Russia is very limited, tied primarily to proliferation concerns and conversion of nuclear stockpiles.  Broadening civil nuclear cooperation will depend in large part on the 123 Agreement for peaceful nuclear cooperation entering into force.  (This Agreement, signed by the Bush Administration in May 2008, was resubmitted to the Congress by the Obama Administration on May 10, 2010.) 

The three-part series on this topic explores the present state of U.S.-Russian nuclear cooperation, the important role the 123 Agreement can play in fostering cooperation, and efforts in both countries to promote research and development of fast neutron reactors.

Part I:  U.S.-Russian Cooperation in Nuclear Energy: More to Be Done

Ongoing US-Russian nuclear cooperation has two dimensions: a broad focus on enhancing nuclear security and a more limited development of commercial activities.  Various activities have been undertaken under Congressionally-funded threat reduction programs to reduce the likelihood of nuclear materials falling into the wrong hands, including U.S. funding for security upgrades at Russian nuclear warhead storage sites to improve “protection, control, and accounting of” Russian nuclear weapons and materials.

The development of cooperation dates back to the signing of a February 1993 agreement under which Russia agreed to blend down highly enriched uranium (HEU) from Soviet nuclear warheads and to sell the resulting low enriched uranium (LEU) for use in the U.S. civilian nuclear industry.  The HEU Purchase Agreement, which established the 20-year, $8 billion Megatons to Megawatts program, provided for such one-way trade until 2013.  As of the end of 2009, Tenex, a Russian government-owned entity, had sold approximately 72 percent of the total amount of LEU that both sided agreed to be sold over the lifetime of the agreement to USEC, the program’s executive agent for the United States. (USEC is now a privately-owned corporation.)  This program has met a significant share of U.S. nuclear fuel needs, contributing to the generation of about 10 percent of electricity output in the United States.

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According to a recent European Commission press release, greenhouse gas emissions reported by European industrial facilities subject to the EU Emissions Trading System (EU ETS) declined by 11.6% on a CO₂-equivalent basis from 2008 to 2009.  Verified emissions from the 12,622 facilities now covered by the EU ETS totaled 1.87 billion tons in 2009, down from 2.12 billion tons in 2009.

The EU ETS is currently in its second trading period, or “Phase II,” which runs from January 1, 2008 to December 31, 2012.  Phase II coincides with the period during which the EU is obligated, under the Kyoto Protocol to the U.N. Framework Convention for Climate Change, to reduce its greenhouse gas emissions to 2.08 billion tons annually.  With the EU-wide decline in emissions from 2008 to 2009, the EU easily met its Kyoto Protocol obligation for 2009.

Under the EU ETS, covered facilities must surrender one EU emissions allowance, or EUA, for each ton of CO₂ or equivalent emissions.  During Phase II of the EU ETS, covered facilities are allocated EUAs for a portion of their historical emissions levels at no cost; if their emissions exceed that level, they must purchase EUAs on the market.  Covered facilities may also surrender, in lieu of EUAs, international emission reduction credits provided through the Kyoto Protocol’s “flexible mechanisms.”  However, such credits accounted for only 4.3% of all surrendered allowances for 2009 emissions.

The sharp decline in EU-wide greenhouse gas emissions in 2009 appears to be attributable to a number of factors.  The main factor seems to be a substantial reduction in industrial activity triggered by the global financial crisis.  Another factor appears to be the relative pricing of natural gas and coal in 2009.  Natural gas prices were exceptionally low during much of 2009, prompting many facilities covered by the EU ETS to shift from coal to natural gas, which emits lower levels of greenhouse gases when burned.  A third factor may be the price of EUAs, which could have triggered efficiency improvements and other changes in the behavior of greenhouse gas-emitting facilities required to purchase them to cover total emissions.  EUAs currently trade near €15 per ton, but during much of 2009 were priced at roughly half that level.

The rate and direction of change from 2008 to 2009 of verified emissions levels among EU member states varied tremendously.  One state, Luxemburg, experienced a slight increase in emissions for its 15 covered facilities, from 2.10 million tons in 2008 to 2.18 million tons in 2009.  Norway, with 115 covered facilities, experienced only a slight decline in emissions, from 19.34 million tons in 2008 to 19.22 million tons in 2009.  In contrast, Germany, which accounts for 1,971 covered facilities - by far the largest number in the EU - experienced a nearly 10% decline in emissions, from 472.67 million tons in 2008 to 428.18 million tons in 2009.  Spain, with 1,108 covered facilities, had an even greater decline of about 16%, from 163.46 million tons in 2008 to 136.93 million tons in 2009.

With Europe’s continuing but erratic recovery from the global financial crisis, it remains to be seen if the EU will be able to stay within its Kyoto Protocol emissions target for 2010.  However, it is clear, with EUAs trading at roughly twice their 2009 price, that the cost of compliance for those covered facilities that must purchase them is increasing.

For further information about this topic, please contact Akin Gump.

On April 1, 2010, the new mandatory CRC (formerly known as the Carbon Reduction Commitment) energy efficiency emissions trading scheme came into force in the UK.

The aim of the CRC Energy Efficiency Scheme (CRC) is to reduce CO₂ emissions and increase the energy efficiency of those large businesses and public sector organizations that the UK government believes are responsible for an estimated 10 percent of the UK’s overall greenhouse gas emissions.  It is expected that the implementation of the CRC, through the CRC Energy Efficiency Scheme Order 2010, will contribute significantly towards achieving the UK’s target, under the Climate Change Act 2008, of reducing its greenhouse gas emissions by 80 percent before 2050 (compared to 1990 levels).  This, in turn, will assist the UK in achieving its international targets under the Kyoto Protocol and other EU CO₂ reduction targets and is aimed at putting the UK at the forefront of the green technology revolution on the international stage.  The CRC runs alongside, and is intended to conform with, the EU Emissions Trading Scheme-the former dealing with large non-energy intensive businesses and public sector organizations on a UK national level, while the latter deals with energyintensive industries (such as manufacturing and refining) on an EU-wide basis.

The CRC is divided into seven Phases beginning on April 1, 2010, each of which lasts for approximately seven years, (except for the first Phase, which will last three years and be known as the Introductory Phase).  There is also a deliberate two-year overlap between each Phase at the beginning and the end of each Phase.  Each of the seven Phases is further divided into “Compliance Years,” which run from April 1 to March 31.  During the Introductory Phase, the UK government will sell an unlimited number of Allowances at a fixed price of £12 per ton of CO₂, while, in subsequent Phases, the UK government will auction a limited number of Allowances annually to encourage participants to reduce their CO₂ emissions.  The Allowances may also be bought and sold by participants in the secondary market.  Participants will be required to buy in advance the amount of Allowances that they expect to require to cover their emissions in any relevant Compliance Year and ultimately to surrender those Allowances to the Environment Agency, the administrator of the CRC.

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Prime Minister Kevin Rudd has flip-flopped on one of the key promises of his 2007 election today, announcing that the government’s carbon pollution reduction scheme (”CPRS”) will be delayed until the expiry of the Kyoto Protocol at the end of 2012.  The CPRS was due to start mid-next year, and the delay represents a significant and controversial retreat from what Prime Minister Rudd had once called “the great moral and economic challenge of our time” even previously threatening to dissolve parliament and call an election to resolve the issue.  He yesterday blamed the decision on the opposition’s failure to support the measure and the slow progress of climate change developments at the global level.

The Senate (where the ruling Labor party does not have a majority) has already rejected the proposed CPRS twice last year - in August and December, just prior to the UN climate change meeting in Copenhagen.  The announcement follows a report released last week by Melbourne think tank the Grattan Institute “Restructuring the Australian Economy to Emit Less Carbon,” which concluded that $22 billion in “free” permits, to be given to the dirtiest polluters under the proposed legislation over the next decade, are a waste of taxpayers money.

The opposition Liberal-led coalition supports the emissions reduction target and renewable energy targets, but opposes any emissions trading scheme or a carbon tax.  It instead proposes a suite of measures such as carbon sequestration and forestry.  The Greens, who also opposed the scheme, support a carbon levy to price carbon.

While Prime Minister Rudd today stressed that the federal government’s commitment to climate change reduction remains unchanged, it clearly has been removed from the agenda at least for the near-term.  Similarly, the future of cap and trade in the U.S. seems doubtful: this week Senator Lindsey Graham (R-SC) withdrew his support for the major Senate climate bill he has been working on for months with Senators John Kerry (D-MA) and Joseph I. Lieberman (I-CT), which they were scheduled to announce on Monday morning. 

For further information about this topic, please contact Akin Gump.

To view Part I of “Update on Developments in Russia’s Renewable Energy Sector,” please click here.  

Investment in Renewable Energy

After the 2008 announcements and proposals calling for increased investment in production of solar products in Russia (see earlier ClimateIntel postings), some steps were taken by the government and by industry.  For example, Nano Solar Technology (NST), created in June 2009, undertook a solar module project in the Republic of Chuvashia.  This 49/51 joint venture is owned respectively by Russian state corporation Rusnano and the Renova Group of Companies.  Oerlikon Solar has been chosen to provide a 120 MW end-to-end line for the production of thin film modules.   The equipment is scheduled to be delivered to a new production facility located on the territory of the chemical plant “Khimprom” (city of Novocheboksarsk) in 2010, with production scheduled to start in 2011.  This project will significantly increase the production capacity of the Russian PV market.  Ryazan Metal Ceramics Instrumentation Plant in Ryazan Oblast is already using a 12 MW module manufacturing line supplied by Spire Corporation. Bogoroditsk Plant of Techno-Chemical Products in Tula Oblast also received a solar module manufacturing line from Spire Corporation last year (see previous ClimateIntel postings).  Both Russian plants are daughter companies of the holding company OJSC Russian Electronics, which is controlled by state corporation Rostekh.

Some investments have also been undertaken in the nascent biofuel sector.  OJSC RT-Biotekhprom, a wholly-owned holding company of state corporation Rostekh, announced plans to produce biofuel pellets and butanol in Arkhangelsk Oblast.  The wood pellet facility will have an annual capacity of 150,000 tons and is expected to be completed in Fall 2010.  The head of RT-Biotekhprom also heads an affiliated company — OJSC Biotechnologies Corporation — which is developing plans to produce two million tons of biofuel additives for motor fuels (gasoline and diesel) in the future.

The Ministry of Regional Development in September 2009 discussed a major project to promote energy efficiency in Arkhangelsk Oblast.  This project seeks to convert boilers from coal and diesel to biomass (from readily available wood waste in the region) and to set up production of biofuel pellets.   

As concerns hydropower, the development of small hydro power plants in the country appears to have slowed.  The fund “New Energy” created in early 2007 to implement RusHydro’s 2006 program for building small hydro power (SHP) plants with new capacity of up to 300MW by 2010, has been unable to handle the task, according to a source familiar with the situation.  In 2008, the fund’s portfolio included 383 prospective SHP projects with total capacity of 2.1 GW.

Prospective wind power projects are also in the news.  In 2009, the Russian daughter company of Canada’s Greta Energy Inc announced plans for a 72 MW wind project in the Yeisk district of Krasnodar Krai and began negotiations with manufacturers of wind turbines and related equipment.  The company plans to put three wind power facilities into commercial operations in early 2012.  According to a media report, Greta Energy “plans to invest up to €250 million in its first wind farm” near Russia’s Black Sea coast.  The Russian daughter company of The Netherland’s Windlife Energy is the leading developer of a 200 MW wind farm project (with 100 wind turbines) in Murmansk Oblast. This project is expected to be fully completed by the end of 2013.  Various wind power projects, as well as challenges facing the industry, were discussed during the first national conference held by the Russian Wind Industry Association in mid-November 2009. 

It may not take long before Russian hydrocarbon companies also begin to invest in domestic wind power projects.  For example, LUKOIL, citing the Yeisk project, has publicly expressed interest in a pilot project proposed near the city of Lagan on the Caspian Sea. 

However, it is less certain that the country’s wind-power capacity will reach the goal presented by RusHydro in 2008 to increase wind power capacity tenfold (from an estimated 12 MW in 2005 to a target capacity of 120 MW in 2010).  The federal government’s January 2009 decree did not include specific percentages for each type of RE input (i.e., small hydro, wind, solar) to be used in electricity generation.  Specific targets were in a draft decree, but these were later removed, according to a person familiar with the situation. 

The future development of the renewable energy sector depends on the Ministry of Energy speeding up work on developing and adopting additional RES regulations responsive to the market.  Currently, the number of finalized projects is small and the amount of government support for renewable energy is quite limited - especially when measured against the huge amounts allocated for gas and oil development projects.  It will take not only the passage of new laws and favorable regulations, but also a long-term political and financial commitment to further develop the renewable energy sector before one can speak of “breakthroughs” in this area.

For further information about this topic, please contact Akin Gump.

Additional legislation and executive branch implementing regulations will be required to boost substantial private investment in domestic renewable energy (RE) projects inasmuch as  private investment in this area will follow - not precede - the federal government’s investment in major projects.  Private Russian companies will nevertheless continue to undertake feasibility studies as they await federal legislation, as well as the development of specific regulations as required by certain provisions of the 2007 federal law “On Electric Power.”

Electricity Generation

In April 2008, the Chairman of the State Duma Energy Committee spoke of the need for the federal government to develop and introduce regulations based on the 2007 law “On Electric Power” concerning RE pricing and economic incentives, and to articulate “clear economic rules” for attracting investors.  Subsequently, the federal government issued an important decree on June 3, 2008 (№426) for determining the qualification of generators that use renewable energy sources (RES).  On November 17, 2008, the Ministry of Energy issued a regulation (№187) for the issuance, transfer and redemption of renewable energy certificates (RECs).  This regulation, which came into force on February 27, 2009, is likely to be reworked in 2010.  The executive directive issued on January 8, 2009 outlined the federal policy on the use of renewable energy for electricity generation and tasked the Ministry of Energy with developing regulations and other follow-up actions (see previous ClimateIntel posting). 

According to Anatoly Kopylov, Vice President of the Russian Wind Industry Association (RAWI) and a leading expert on renewable energy policy issues, a series of regulations still need to be developed and adopted detailing RES provisions and the requirements of the 2007 law.   Some concern mark-ups for electricity generated from RES, as well as the volume of electricity to be purchased on the wholesale market.  Other regulations concern “rules, criteria and procedures for providing federal budget subsidies to compensate costs associated with connecting RES generators of up to 25MW” to the grid.

The draft bill “On Heat Supply” (#177427-5), introduced in the State Duma in March 2009, was passed in a first reading on November 11, 2009.  Although “renewable energy sources” (RES) are not specifically mentioned in the text of the proposed legislation, the Ministry of Energy’s website comments that the draft bill envisions “measures for development of RES in the area of heat supply.”  Amendments and comments are to be submitted to the State Duma Energy Committee by February 10, 2010.

It is interesting to note that Russia’s efforts to create a legislative framework and regulations for renewable energy have been paralleled by Kazakhstan.  Legislation adopted earlier by Kazakhstan “On Support for the Use of Renewable Energy  Sources” was signed into law in July 2009.  Work on relevant regulations in Kazakhstan is currently under way.

Alternative Fuels

The draft bill “On the Use of Alternative Motor Fuels” (#130858-4), initially introduced in the State Duma in January 2005, has been revised for a third time by the authors and reviewed by the State Duma Energy Committee, which is overseeing this initiative.  On October 9, 2009, the Energy Committee sent the draft bill to the State Duma Council.  According to the draft ruling posted on the Duma website, the State Duma Council recommended that the draft bill be resent to the State Duma Legal Department, the Presidential Administration, the Cabinet, and various committees of the Russian parliament for comments and suggestions.  One criticism already received by the Energy Committee notes that the draft bill does not address the issue of “mandatory certification of alternative motor fuels” as they relate to current emission requirements.  The text of the draft ruling of the State Duma Council suggested that the Energy Committee receive feedback until November 13, 2009 and that the Committee should then prepare the draft bill for a first reading during the spring (January-July 2010) Duma session.

Although more than two years have passed since a legislative initiative on biofuels was announced, the fate of the draft bill, “On the Bases for the Development of Bioenergy in the Russian Federation,” is not clear.  Presented as a joint effort of both the Ministry of Agriculture and the Federation Council Committee on Economic Policy, the text of the 2007 draft bill has still not been posted on the State Duma website.  The head of the Bioenergy Development Center at the state-owned Russian Research Institute for Mechanization in Agriculture recently announced that the Agriculture Ministry had contracted the Institute to work on the draft.  Thus, it is not clear who is ultimately responsible for the introduction of this draft bill in the Duma.  In an interview with the “Regions of Russia” journal (Issue #9, September 2009), the head of the Center noted that the steps required for “mass production of equipment for bioenergy projects in Russia” have still not been taken and that the country’s “mechanical engineering is not ready to participate in the development of the new industry.”

There is no internal momentum for developing biofuel technologies in Russia and the country must rely on foreign technology in this area (as in many other areas) for launching domestic projects - despite the fact that in late 2007 then-President Vladimir Putin stressed the need to create conditions for private companies to produce biofuel in Russia (see previous ClimateIntel posting).  One of the drags on progress in this area is opposition - possibly from the Ministry of Finance - to lowering the excise tax on biofuel for domestic use.

As in the electricity generation area, Kazakhstan is developing a draft law “On State Regulation of Production and Turnover [Sales] of Biofuel,” which was approved by the lower house of the Kazakh parliament in a first reading in May 2009 (see previous ClimateIntel posting).  A related draft law outlining serious penalties for violations of the law was also approved.

The Russian executive branch continues to voice support for the development of the nascent renewable energy sector.  As concerns biofuel development in Russia, President Dmitry Medvedev said at a September 2009 meeting of the Commission for Modernization and Technological Development of Russia’s Economy that Russia has “made some advances here but [we] have few results to show for it so far,” adding that “this is something that requires very detailed preparation, but it is nevertheless important for our country.”  It is not clear whether the President’s objective assessment of the situation will lead to accelerated work at lower levels in federal ministries and agencies, given the severity of the economic downturn and the many other areas in which the Russian economy is lagging or underperforming.

To view Part II of “Update on Developments in Russia’s Renewable Energy Sector,” please click here.

For further information about this topic, please contact Akin Gump.

As negotiations at Copenhagen near conclusion, it is increasingly unlikely that a global deal can be made.  On Tuesday, the United Nations released the latest official draft agreements that will be presented to world leaders (including President Obama) in the final two days of the climate conference.  The recent drafts acknowledge that industrialized nations have historically been responsible for global greenhouse gas emissions and, thus, must lead efforts to combat climate change by providing funding and technology to poorer nations.  Both the text from the Long Term Cooperative Action working group and the document from the Kyoto Protocol working group, however, leave many critical issues unresolved.  Most notably, the international community has not agreed upon targets for emission cuts and adaptation funding.

Emission reduction targets

Developed countries and developing countries disagree on which countries should be obligated to reduce their emissions and what the level of these commitments should be. Leading developing countries insist on an extension of the Kyoto Protocol, which imposes obligations to reduce greenhouse gas emissions only on industrialized nations.  A rift within developing countries emerged when small island states and several African states insisted on a new protocol that would not only impose more stringent emission cuts for developed nations, but also expose developing countries to the risk of mandatory cuts. The European Union and the U.S., on the other hand, are calling for a more comprehensive document that would impose mandatory emission cuts on large emerging economies like China.  Developed countries also seek to delay the implementation of legally binding emission reductions.

The size of emission cuts and the benchmark for measuring these reductions is also a point of contention between developed countries. The EU has committed to cutting its emissions by 20% by 2020, and by 30% if a strong global agreement is reached. The EU’s proposed emission reductions are measured against 1990, as called for in earlier international agreements.  By contrast, the U. S. wants to use 2005 as the baseline year for cutting emissions because (i) the U.S. never joined Kyoto and (ii) this benchmark is more relevant to the Obama administration.  The U.S. has committed to cutting emissions by 17% of 2005 levels by 2020.  This corresponds to a cut of 3-4% beneath 1990 levels by 2020.  Senator John Kerry reinforced the legitimacy of the U.S. commitment to an international agreement by guaranteeing that this commitment would be enforced domestically, provided that China and other developing countries meet the U.S. demand for transparency and accountability on their emission reductions. 

Other issues, such as the “peaking year” concept, are also creating roadblocks.  India has taken the lead in opposing the imposition of a “peaking year” on the emissions of countries like India, China, Brazil and South Africa, which would demand that developing countries “peak” their emissions by 2025.  Instead, India proposes limiting the increase in global temperatures to within 2 degrees Celsius of pre-industrial times.  A smaller group of 43 of the smallest and most vulnerable developing countries has stated they will not accept any rise of more than 1.5 degrees Celsius since, they contend, anything higher would lead to disastrous consequences (e.g., a rise in sea levels as a result of climate change).

Another issue is the “hot air” concern.  With the collapse of the heavy industrial base of the Soviet Bloc countries in the 1990s, a large number of the carbon rights, or Assigned Amount Units (AAU), held by Russia, Ukraine and other Eastern European countries were never used.  If, under the new deal, the former Soviet Bloc countries are allowed to sell these surplus AAUs, or “hot air”, to nations that fail to meet post-2012 emission targets, this could impair all emission reduction commitments under the new deal by up to one-third.

Funding commitments and transparency

The G77 group of countries, backed by the least developed countries and small island states, are seeking $400 billion per year (1% of the GDP of industrialized nations) to help developing countries grow without increasing their greenhouse gas emissions.  Developed nations have not made offers anywhere near that level, nor do the latest draft agreements provide for funding beyond 2012.  As a compromise, the African Union chief negotiator Meles Zenawi has called for a significantly scaled-back finance deal, calling for $50 billion per year for developing countries by 2015 and $100 billion per year by 2020, with half of these funds allocated to vulnerable and poor countries, regions such as Africa and small island states.

China has acknowledged the needs of poorer developing nations in conceding that these nations should take priority in receiving aid to combat climate change.  China maintains its position, however, that industrialized nations should provide 0.5-1% of their annual GDP as funding to subsidize the efforts of developing nations to curb greenhouse gas emissions.  Further, China strongly opposes carbon tariffs proposed by other countries to protect their domestic industries. China has also refused to submit to international verification of whether it is actually implementing its reduction commitments.

The U.S. has rejected the proposal that industrialized nations contribute up to 1% of their GDP. The U.S. and other developed countries also seek to monitor developing countries on their compliance with whatever commitments are ultimately made, or at a minimum, to subject countries’ emission reports to international consultation and review.  The concern is that, without such compliance checks, some developing countries may have an incentive to “pad” the amount of their greenhouse reductions or otherwise game the system and that other countries may not sign on to the international agreement due to its lack of transparency.

With less than two days remaining for the climate change negotiations at Copenhagen, it is critical that the international community reach some sort of workable consensus on the key issues of emission reduction targets, funding commitments and transparency of the global system.

For further information about this topic, please contact Akin Gump.