Government has published draft law that could pave the way for control of emissions by companies and regions

By Angelina Davydova

ST PETERSBURG, Russia, Nov 5 (Thomson Reuters Foundation) - Russia is preparing the ground for future regulation of carbon emissions, amid calls to wean the economy off its heavy dependence on polluting fossil fuels.

Russia's Ministry of Natural Resources and Environment has published a draft law introducing a baseline for controlling planet-warming emissions.

It includes a legal definition of greenhouse gases and how to measure and report emissions, as well as enshrining the government's right to regulate them.

The draft is open for public consultation until the end of this week and is due to be passed to parliament in December, with a view to adoption in early 2016.

According to Vladimir Berdin, vice-director of the International Sustainable Energy Development Centre in Moscow, the draft sets out rules for potential systems to monitor and regulate emissions of carbon dioxide (CO2) and other climate-changing gases.

Russia is lagging behind many other countries - including major developing-economy emitters - in this area, experts say.

Mikhail Yulkin, head of the climate desk with the Russian Union of Industrialists and Entrepreneurs, noted that national carbon schemes have been introduced or are being created in more than 40 countries, with a further 20 systems being put in place at sub-national levels.

"The fact that (Russia does) not have such a system only increases our isolation, provokes suspicion and distrust among investors and consumers, and has a very negative impact on business and the economy," he said.

The new impetus for carbon regulation in Russia is coming from some government ministries and businesses, including the metals sector, and is backed by Alexander Bedritsky, a presidential adviser on climate change, amid growing calls at home and abroad for Russia to act.

In April, the government adopted a framework for a system to monitor, report and verify greenhouse gas emissions, which will be obligatory for companies and regions.

The system will be tested next year, and from 2017, all companies with annual emissions of 50,000 tonnes of CO2-equivalent or higher will be required to report on them.

ECONOMIC RESILIENCE

Russia could reduce its emissions 80 to 90 percent by 2050 from 1990 levels, strengthening the resilience of its economy which is heavily influenced by global oil and gas prices, says a recent study by international energy researchers for the Deep Decarbonization Pathways Project.

Today fossil fuels contribute around 70 percent of Russia's total export revenues, and if minerals and metals are included, the share goes up to 90 percent, the study says.

Russia is currently the world's fifth largest greenhouse gas emitter, following China, the United States, the European Union and India.

Its emissions fell for most of the 1990s and early 2000s as the economy declined after the break-up of the Soviet Union and shifted towards services and extraction of raw fossil fuels.

For the last five years, emissions have been on a slow rise, but the current level is still 29 percent below 1990.

In its pledge for a new U.N. climate agreement due to be finalised in Paris in December, Russia outlined plans to cut its emissions 25 to 30 percent by 2030 from their 1990 level.

But in practice that equates to keeping them at around the same level as now, provoking criticism by green groups.

The decarbonisation study says Russia could follow a far more ambitious strategy that would be both economically and technologically feasible, if the country invests heavily in energy efficiency and renewable energy.

It would also need to switch transport, residential heating and industrial production from fossil fuel to electricity use.

According to study co-author George Safonov from the Higher School of Economics in Moscow, Russia's abundance of natural resources offers huge benefits, but also creates risks, as demonstrated by the economic slowdown which has followed a drop in oil prices and international sanctions over the Ukraine crisis.

Official statistics from September put the number of poor Russians at 21.7 million, or 15 percent of the population - nearly 15 percent higher than in the first half of 2014. This is largely explained by inflation and a rise in the cost of living.

The decarbonisation study says higher emissions cuts would lead to growth in investments and energy bill savings that could boost GDP by at least 1 percent per year and jobs by a net gain of more than 3 percent by 2050.

SANCTIONS HIT FINANCE

Yet many experts doubt there is sufficient political will in Russia for a transition to low-carbon development.

"The country will probably reach its 2030 (emissions) target anyway, mainly due to the current economic crisis, so we have to find new motivation and incentives," said Safonov.

Legislation supporting the development of renewables and energy efficiency has been adopted in the last few years. But economic woes have put many such initiatives on hold, with both public and private investment drying up.

Oleg Pluzhnikov, a former senior official with the Ministry of Economic Development who now heads the climate desk at the EU-Russia Industrialists' Roundtable, said international sanctions are blocking Russia's access to global financing for emissions reduction measures.

In the next two to three years, it is unlikely to get any "cheap" money for energy efficiency from international financial institutions, he told a recent discussion on Russian climate legislation.

Lobbying by the fossil-fuel industry is another obstacle, Pluzhnikov noted.

"Some business representatives are standing against any carbon regulation, fearing it might increase the bureaucratic burden on companies," he said.

(Reporting by Angelina Davydova; editing by Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, corruption and climate change. Visit www.trust.org)

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