To Sign or not to sign: Kyoto Protocol, Russia and Bush's 2004 re-election bid

The thoughts that follow were written primarily in Moscow at the World Climate Change Conference (WCCC 2003) in early October 2003. It was there that supporters of the Kyoto Protocol --- individuals, groups, governments --- were hoping that Russia's President Vladimir Putin would announce that he would sign the protocol, thereby putting it into force as an international document. All eyes were on this scientific conference. The organizers did as promised: they delivered Putin as the keynote speaker.

Alas, the pro-Kyoto attendees from a wide range of countries, including Russia, were greatly disappointed. More so, when they realized that the Russian organizers of the WCCC had planned a frontal attack on the science of climate change and, more specifically, on the protocol and Russia's support for it.

The media picked up on an off hand comment made by Putin, I believe in jest. He suggested that fur coats would no longer be needed in the event of global warming: a positive outcome of higher global temperatures. Seated next to Putin on the dais was one of his key advisors known to be hostile to the Kyoto protocol.

In the paragraphs that follow, I provide a brief summary of the debate within Russia about whether to sign or not. I then provide some speculation about whether the way that Putin deals with the protocol can influence in any small way Bush's re-election bid in November 2004.

The community of nations is at a point in time with regard to the global warming issue where scores of countries have signed on to support the Kyoto Protocol. The intent of the protocol is to begin a process of re-appraisal of and limitations on the emissions of greenhouse gases (these are also referred to as heat-trapping gases).

According to the protocol's language it cannot come into force as a legal instrument, until the total amount of CO2 production of the signatories adds up to 55 percent of the globe's total production of this greenhouse gas. As of now, signatories' contributions add up to 44 percent. The United States is responsible for about 36 percent of emissions.

The US government is leading the internal political opposition to the protocol as a result in large measure of special interest groups. Under Clinton's presidency, the US Congress opposed support for the protocol in the absence of specific concessions, such as the developing countries not being given special reprieve from their 'obligation' to restrict their greenhouse gas emissions. China and India were specific targets of this US requirement, among others.

The administration of George W. Bush, strongly pro-energy and doubter of the reliability of the science of climate change (for real or manufactured beliefs) has claimed that for the US the Kyoto Protocol process is a dead issue. It refuses to sign on to any restrictions, obligatory or otherwise, on its future economic growth and development prospects. Bush professes to pursue greenhouse gas reductions through its suggested voluntary emission reduction efforts for various socioeconomic sectors of society. [NB: However, the Bush administration is bringing legal action against those US states that are seeking to reduce greenhouse gas emissions through their own state laws.

The US seems to be putting more funds into climate-related research, which many see as an attempt to avoid having to make any decisions of note at least during Bush's tenure in office, and beyond if possible. Recall that the US is the largest emitter in the world by far of greenhouse gases.

That leaves the Russian Federation as the next largest major producer of greenhouse gases (at the levels emitted in 1990, the protocol's base year) to sign or not to sign the Protocol. If Putin signs the protocol, it will go into force. If he decides not to sign, the protocol goes into the dustbin of history. What is the government of Putin to do?

There are lots of statements in the media and by a wide range of experts in lots of different fields that claim that Russia has everything to gain and little to lose by signing the protocol. They argue that Russia can make billions of dollars by selling its carbon credits to those countries that are emitting well beyond their allotted share of greenhouse gases.

Russia and its predecessor state, the Soviet Union, are well known for their notoriously inefficient use of energy. Russia's amount of energy per person or per GDP dollar is considerably higher than in much of the world and especially in Europe, a region with which it often compares itself. So, not only will it make money immediately by signing on ???, but there is a lot of potential to generate increasing amounts of income as it becomes more energy efficient. Some observers have argued that the gains from producing products using energy efficient methods will surpass those from the selling of carbon credits in the international marketplace. So it seems, there is no downside to signing the protocol, while at the same time becoming a global environmental savior.

There is concern, however, that what at first glance appears to be beneficial with respect to the short-term gains from signing the protocol could turn into mid- to long-term losses to the country.

Russia is one of the world's largest exporters of oil, outside of the Persian Gulf region. If it signs the protocol and governments and industries everywhere devise ways to reduce their dependence on fossil fuels, they will lose foreign exchange. That would greatly hinder its economic development plans and prospects. There is also a belief held by many Russians that a warmer Russia would mean higher levels of agricultural production, an increase in the land that could be used for farming and grazing, reduced domestic energy costs, and so forth.

One Russian authority fostering a regional level management scheme for Russia suggested that there would be several benefits at the regional to local levels by signing the protocol: "the Kyoto Protocol means investments. For industry, fuel and energy complex, housing and communal services it means renovation of capital assets and reduction of costs for fuel-energy resources; for agriculture it means conversion to new methods of land management and increasing crop capacity of fields; for forestry it means both enhancing of forest lands and opportunities of timber industry development" (I. Starikov. 2003. "Regional approach to state regulation and management of carbon investments" in Business [international journal in Moscow, special issue on the Kyoto Protocol, p. 40).

A comment made by the chairman of the state Duma Environmental Committee, Vladimir Grachev (2003), underscores the lack at present of an infrastructure within the country to cope with the downstream domestic economic aspects of signing the protocol. For example, are their tax laws in place within the country to reward the energy efficient enterprises and to enforce penalties on those who are non-compliant? He noted that "Russia does not have the legislation in place for application of these new instruments of international and interregional cooperation" but needs to develop such a legal framework to enable and encourage investment in an energy efficient Russia.

There are bigger political questions that the Kyoto process exposes, geopolitical questions. In the Bush era with a US attitude of "go it alone", the US has isolated itself from its traditional allies, except Great Britain, by taking what have been unilateral decisions to topple the Saddam Hussein regime. Russia, France and Germany separately as well as together have opposed US policy about the pre- and post-war efforts in Iraq. Is Russia going to stand with Europe, which staunchly opposes the US boycott of Kyoto, or with the United States? With regard to the recent (September 2003) summit at Camp David between Bush and Putin, one can only wonder what was said about greenhouse gases, climate change and the Kyoto Protocol.

Let's speculate for a moment by asking the following question: What might be the impact on the chances for Bush's re-election in November 2004, if Putin were to sign or reject the protocol by the end of 2003? Or by march 2004? Or by August 2004? The point is that the timing of the signing (on not signing) as well as of the events surrounding the signing itself could have tremendous political implications for US presidential politics. Bush has already been challenged on his anti Kyoto stance by individuals, environmentalists, environmental groups, and his own environmental agencies and by city and state governments as well. Such opposition could be fortified, when as well as if Putin signs the protocol.

In some key ways the US and the Russian positions are similar. Both countries, for example, do not want to give up their prospects for continued economic development and growth. They do not want to make their economies poorer or more vulnerable to outside influences. That is understandable.

While it appears that the Russians are spending considerable effort to sort out the fall out that might follow the signing of the protocol, it is unclear that the American federal government is putting in a similar effort. Nevertheless, the American public, non-governmental organizations and several local and state governments are spontaneously becoming energized, as are some corporations and the commodities market, to take actions that address the global warming issue. In the US it appears that this may prove to be a case where government policy will follow the will of the people rather than lead it. In the Russian situation it will likely be the opposite.

Until the mid-1990s one might have argued that the US was a world power with regard to climate policy. Today, that is no longer the case. Interestingly, the deputy Minister for economic development and trade, M. Tsikanov (2003), recently suggested that, by signing the protocol, Russia could "become a leader in the climate-related process and provide it with the status of 'world rescuer'…If Russia does not sign the protocol it will never come into force" (p.48).

Tsikanov provided some interesting insight into comparative emissions by major powers, painting quite an advantageous (at least on the surface) economic picture for his country. He noted that Russia could have on the order of 1.5 to 2 billion tons of CO2 equivalent to trade, because its emissions are well below the 5% reduction below the 1990 emission level required by Kyoto; Russia's level of emissions are below about 17 percent below their 1990 level, due to the breakup of the Soviet Union and the resulting sharp reduction in industrial activities. The US, however, as well as Europe and Japan, are emitting greenhouse gases above their 1990 baseline and would need to acquire carbon credits from countries that have credits to offer... like… Russia!

However, their demands for the potential purchase of carbon credits, at present, do not come near the amount that Russia has available for trade and the prices that they have offered has been a fraction of their expected value in the market place.

Tsikanov noted that European governments are reluctant to commit to carbon credit purchases, until Russia signs the protocol.

References:

Tsikanov, M. 2003. "Mukhamed Tsikanov: We are waiting for real proposals from our partners…" [same magazine, pp. 45-48].

Grachev, V. 2003. "Concept of legal and regulatory framework for GHG emissions and removals by sinks", p. 41, same Business journal. WCCC 2003.

--Michael Glantz