Russia won't budge on AAU surplus
PointCarbon
John McGarrity

Russia will refuse to give up any of its surplus emissions rights under climate pact talks.

Russian climate negotiator Sergey Tulinov today said his country would not discuss moves to give up over 6 billion surplus emissions rights at the Copenhagen climate summit next month.

Under the Kyoto protocol Russia can hold on to these emissions rights, known as assigned amount units (AAUs), after 2012.

But the EU and green groups say banking of AAUs beyond the expiry of the current Kyoto phase in 2012 will weaken aggregate cuts being offered by other industrialised countries.

“We will not discuss these emissions rights here or in Copenhagen,” Tulinov told a side event in Barcelona at the end of a week of preparatory UN talks.

“Let’s agree some future framework and we will come to this issue,” he said, without specifying what that framework should be.

EU demand

The EU will ask Russia to clarify its position on surplus emissions rights – which can be sold as offsets to developed countries to help them meet targets – at a high level summit later this month.

Last month, the Russian government asked its largest bank to prepare guidelines on how up to 100 million AAUs could be sold by the end of 2012.

So far Russia has held off from selling any of its surplus.

Russia has an excess of AAUs because the amount of climate changing gases it pumps into the atmosphere is currently 30 per cent below 1990 levels versus a Kyoto target to freeze emissions from 1990 through 2012.

The country’s lower emissions are a result of a collapse of its industry following the fall of communism in the early 1990s.

Russia – the world’s third-largest greenhouse gas emitter – is desperate to keep hold of these potentially lucrative rights.

AAUs currently fetch between €5-10 each in international markets – and they can be used to cover Russia against any increase in its future emissions.

Earlier this year, Russia’s president said he was prepared to cut emissions 10-15 per cent below 1990 levels by 2020.

Market leverage

The Russian surplus could have a huge impact on global carbon markets, and is being used as leverage in global negotiations, said Alexey Kokorin, an analyst of Russian climate policy for green group WWF.

“AAUs are a powerful bargaining chip,” he said.

To negate the impact on global markets or rich country pledges to cut emissions, nations could establish a non-tradable reserve of emissions rights, participants at the side event suggested.

Anna Korppoo, a specialist on Russia’s climate policy with the Finnish Institute of International Affairs, said surplus emissions rights were bound to be discussed at Copenhagen.

She said: “The surplus threatens the environmental integrity of developed country pledges. It’s hard to see that the issue could be avoided if the Copenhagen talks manage to make progress on targets.”