TCS Daily

The Kremlin That Killed Kyoto

By Ariel Cohen - December 16, 2003 12:00 AM

MOSCOW, Russia -- Andrey Illarionov, Russian President Vladimir Putin's libertarian economic adviser, almost single-handedly engineered the Kremlin's commitment to kill the Kyoto Protocol -- a climate control treaty heavily promoted by the European Union and environmentalist movement. UN Secretary General Koffi Annan called upon Putin last Thursday to ratify the treaty. Without the Russian and American signatures, the Protocol is dead in the water.


The Protocol is purported to limit global warming through curbing carbon dioxide emissions at a cost deemed unacceptable for Russia. Illarionov used Putin's stated policy goal -- to double Russia's GDP by the year 2010 -- and the staggering cost of Kyoto's implementation to convince his boss that the Protocol is dead meat.


Russia would need to spend up to 4.5 percent of its GDP to comply with Kyoto, Illarionov told me in the Kremlin. "When Deputy Minister of Economy said recently that Russia is still negotiating, I corrected him saying that he reflected the Russian position in August. Things are different in December."


Putin even joked in October that the global warming will "cut fur coat costs and improve wheat yields." The joke made the green lobby... well, green. Jokes aside, Russia is responsible for 17 percent of the global CO2 against the U.S.'s 35 percent based on the baseline year 1990. Today, Russia is responsible only for 8-9 percent, as many smokestack industries collapsed, allowing Russia to trade in "hot air" quotas. However, the Russian economy is only 4 percent of America's. Russian GDP after five years of robust growth is only $400 billion against U.S.'s $11 trillion.


Deft Bureaucratic Politics


Initially, when the Protocol was initiated, Russia believed it stood to benefit from carbon dioxide emissions trading because its current CO2 production is 30 percent lower than the baseline year 1990 due to the extinction of many Soviet-era industrial dinosaurs. There is plenty of room in Russia to improve environmental performance, reducing emissions even further -- and increasing an incentive for emission trade.


However, deft bureaucratic politics by treaty opponents have reversed the initial commitment to ratify the protocol. On October 1, Illarionov gathered in Moscow the World Climate Change Conference, at which leading Russian and Western Kyoto opponents voiced their concerns.


Professor Kirill Kondratyev of the Research Center for Ecological Studies in St. Petersburg claimed that the "science behind the Kyoto Protocol is still highly uncertain, and reducing greenhouse gases will have little or no impact on climate change."


Richard Lindzen, Sloan Professor of Management at MIT added that "Climate change is inevitable as a result of natural processes and regardless of human factors... Kyoto... will have an insignificant impact on climate. This is true even if the climate change in the past century has been significantly affected by humanity, or that the model projections (of global warming) are correct."


Margo Thorning, director of International Council for Capital Formation, (Brussels) stated that "promised emission reduction targets for the second period of the Protocol (past 2010) to the range of 60-70% lower than the current level will hit the Russian economy very hard, including job losses and lower living standards. Other experts pointed out that when Europe was considerably colder -- in the eighteenth and first half of the nineteenth century, it was infested with malaria. Economic and technological progress allowed eradication of mosquito-infested swamps, while better medicine took care of the sick.


Still, supporters of Kyoto point to the warming up of harsh Russian winters: some birds stopped migrating and the areas infected with viruses of West Nile fever and the Congo-Crimean fever -- another hemorrhagic disease -- have expanded 300-400 kilometers north.


Four Reasons


Russia has rejected Kyoto for four reasons which combine business and geo-economics.


  • First, it did so because U.S. refused to ratify, thus hitting hard the value of emission trading quotas. Russia stands to make much less from hot air trading than initially expected.


  • Second, Moscow is fuming at the treaty exemptions India and China have received. The two giant states are among the world's biggest polluters and, increasingly, Russia's industrial competitors.


  • Third, Russian smokestack industries -- such as ferrous and non-ferrous metals, autos, and oil -- are all standing to lose if the Kremlin signs Kyoto. However, RAO UES, the Russian state-controlled eleven time zone electric grid monopoly, and the state-owned powerful nuclear ministry MinAtom, which also supplies nuclear reactors to the Iranian mullahs, are eager to sign Kyoto.


  • Last, conspiracy-minded Russians are suspecting that Kyoto has become a tool for the EU bureaucracy to limit U.S. and Russian economic growth and reduce Russia to a raw materials "appendage" for Europe, especially as a giant natural gas tank.


Kirill Yankov, the young and dynamic Deputy Natural Resources Minister, also believes that Kyoto, if ratified, would breed yet another layer of bureaucracy tasked with issuing "greenhouse gas emission permits." This will be an additional burden on business which is already suffering from high over-regulation costs. As Russian bureaucrats are notoriously underpaid -- and corrupt -- one can see that Mr. Yankov's concerns are not without merit.


Also, Kyoto does not provide a break given Russia's notoriously cold climate. "Lots of carbon dioxide [emissions are] generated by central heating, which Russia needs seven month a year," Mr. Yankov notes.


Russia should pursue a national program to limit carbon dioxide emissions outside of the Kyoto framework, just as the U.S. and Australia do, says Kirill Yankov. It should study the American experience, without committing to the treaty. In the meantime, Kyoto looks dead. The Kremlin is the one who killed it.


Ariel Cohen, Ph.D., is Research Fellow at The Heritage Foundation.

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