The Russian Federation is a party to the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol of 11 December 1997 (the Kyoto Protocol) and is listed as an industrialised country in Annex B to the Kyoto Protocol. The Kyoto Protocol was fully ratified by the Russian Federation on 18 November 2004 (the federal law was adopted on 4 November 2004 and it came into force on 16 February 2005).

Under the Kyoto Protocol the Russian Federation agreed to cut Russian’s emissions of so-called “greenhouse gases” (GHG) by five per cent or more below the level of emissions for 1990 between 2008 and 2012.

Russia has agreed to try to achieve this objective by applying the following Kyoto Protocol “flexible mechanisms”:

(a) Joint Implementation (JI);

(b) Clean Development Mechanisms (CDM); and

(c) emissions trading.

This paper will concentrate solely on the “consideration procedure” for JI projects in Russia (i.e. the process by which JI projects are assessed by the relevant authorities in Russia). This procedure is also commonly referred to as the “Track 1” procedure” under the Kyoto Protocol.

By the end of 2007 the Russian Government and the Ministry of Economic Development (former Ministry of Economic Development and Trade) adopted a number of decrees regulating the consideration procedure of JI projects in Russia.

Under Decree No. 3321 evaluation of JI projects in Russia is performed by the Ministry of Economic Development (acting as a co-ordination centre of JI projects (the JI Project Centre)) acting through a specially designated commission with authority to provide initial approval for JI projects (the Commission) prior to final approval by the Russian Government on the basis of Decree No. 4242 and within the limits set out in Decree No. 4223.

It is possible to separate the “consideration procedure” of JI projects in Russia into the following four stages:

  1. application to the JI Project Centre (for which expert approval is needed);
  2. evaluation of the JI project by the interested federal executive body;
  3. approval by the Commission; and
  4. approval by the Government.

Currently there are 31 JI projects4 which are going through the “consideration procedure” in Russia (as of 26 December 2008).

2. Application to the JI Project Centre

The first stage of the process is performed by the JI Project Centre.

The JI Project Centre will assess:

(a) whether the emission reduction units resulting from the proposed JI project are aimed at reducing anthropogenic emissions at sources or enhancing anthropogenic removals by “sinks” of greenhouse gases and may be transferred or acquired; and  

(b) whether the proposed JI project meets the criteria set out by Article 6 of the Kyoto Protocol.  

The proposed JI project will be evaluated by the JI Project Centre on the basis of the investor’s application.  

Russian or foreign legal entities, private entrepreneurs and individuals can be applicants.  

Decree 332 does not stipulate whether an application may be submitted by one or several investors. We believe that, if there are multiple investors, an application may be submitted by all investors.  

Three originals of the application should be signed by the applicant (i.e. investor) or its authorised representative and the application must include the following documents5:  

  1. project documentation (see paragraph 2.1. below);  
  2. expert’s opinion as to the benefits of implementation of the JI project;  
  3. passport of JI project (i.e. a document with a description of general data of JI project);  
  4. copies of foundation and state registration documents of the applicant if the applicant is a Russian or foreign legal entity;  
  5. copies of the certificate of state registration as an individual entrepreneur if the applicant is a individual entrepreneur;
  6. copies of personal identification documents if the applicant is an individual;  
  7. copies of documents confirming the applicant’s tax registration in the country of its incorporation;  
  8. documents confirming that the applicant acts as an investor holding assets in the amount required for implementation of the proposed JI project;  
  9. statement of good standing issued by the tax authorities in relation to the applicant, if the latter is a Russian legal entity;  
  10. consent of the owner of the asset where the JI project to be implemented or consent of the other person authorised by Russian legislation to carry out activities prescribed by the JI project;  
  11. personal details and job titles of the persons managing the JI project;  
  12. phased plan of the JI project including terms and conditions of acquisition and installation of facilities required for the implementation of the JI project. Decree 332 stipulates that documents not included in the above-mentioned list should not be requested. After reviewing the application and before final approval of the JI project , the JI Project Centre will submit it to the relevant interested federal executive bodies for their evaluation.  

2.1. JI project documentation

The JI project should aim to reduce GHG emissions in the commitment period between 2008 and 2012. JI project documentation should contain the following data6:  

  • the project’s name, purpose and duration;  
  • project type: reduction of emissions at source or enhancement of removals by sinks;  
  • the sector (type) of source and/or sink;
  • project characteristics identifying source and sector (type) of source and identifying sink, including source location;  
  • initial conditions for implementation during the implementation period;  
  • target for reduction of GHG emissions at source and/or of enhancement of removals by sinks;  
  • a description of activities that will be performed to achieve the targets of the project;  
  • a description of the technologies, production and measures prescribed by the project;  
  • a brief evaluation of environmental impact of the project prepared according to Russian law;  
  • a description of the possible risks of implementation and how they will be minimised; and  
  • how the success of the project will be measured.  

2.2. JI project passport

The applicant should submit the JI project passport in a particular form approved by the Co-ordination Centre and should publish on the website on the Internet.7  

The JI passport should contain the following data8:  

  • the name, purposes and duration of the project;  
  • project type: reduction of emissions at source or enhancement of removals by sinks;  
  • sector (type) of source and/or sink;  
  • project characteristics identifying source and sector (type) of source and identifying sink, including source location;  
  • project targets and value in comparison with the typical targets and value approved by JI Co-Ordination Centre upon consent of the interested federal executive body and published on the website of the JI Co-ordination Centre;
  • target for reduction of GHG emissions at source and/or of enhancement of removals by sinks;  
  • trade name, legal form and address of the registered office if the applicant is a Russian or foreign legal entity; and  
  • personal details and address if the applicant is an individual or individual entrepreneur.  

The initial form of JI project passport was approved on 22 February 20089 but then was replaced by amended form on 14 October 2008.10 The amended form is not materially different from the initial one, the amendments merely clarifying the types of JI projects as: 1) reduction in emissions at source; and 2) enhancement of removals by sinks.  

As of 26 December 2008, 31 passports of JI projects have been published on the website of the Russian Ministry of Economic Development.11  

2.3. Expert opinion on JI project

The JI project should be evaluated by an independent expert organisation chosen by the applicant from the list of expert organisations approved by the Co-ordination Centre, a list initially proposed by the Commission. The Commission selects the expert organisations on the basis of criteria set out in Article 6 of the Kyoto Protocol. In February 2008, five expert organisations were selected and subsequently approved by the Russian Ministry of Economic Development and Trade on 14 March 2008.12  

The list of independent expert organisations is also published on the Ministry’s website on the Internet.13

3. Evaluation of JI project by the interested federal executive body

An interested federal executive body could be a federal ministry, service or agency of the relevant industry sector where the JI project is intended to be implemented.  

In respect of 31 announced JI projects, implementation is intended to be in the following industry sectors:  

  • energy – 24 projects;  
  • industrial processes – three projects;  
  • vehicle and other products – none;  
  • agriculture – none; and  
  • waste and disposals – four projects.  

These announced JI projects have been supplied to one of the following ministries:  

  • Ministry of Natural Resources;  
  • Ministry of Industry and Trade; and  
  • Ministry of Energy.  

The interested federal executive body should evaluate the submitted project in line with its internal methodological recommendations14 and give its positive or negative assessment with regard to the possible benefits of the project.  

4. Approval by the Commission

The Commission was established on 1 February 200815 and held its first meeting on 21 February 2008.

The Commission currently consists of 11 members16 representing different Ministries of the Russian Government.  

The Commission considers applications on the basis of expert evaluation, the opinion of the interested federal executive body and the consent of the application itself.  

The application can be rejected only if:  

(i) The JI project could not be implemented before 31 December 2012; or  

(ii) one of the interested federal executive bodies has given a negative “evaluation opinion”; or  

(iii) the proposed reduction in GHG at source in aggregate with reduction in GHG to be transferred exceeds the annual quota of reduction in GHG in this sector (type) of source and/or sink set out by the JI Project Centre.  

Decree 422 imposes a limit of GHG emissions in the amount of 300 million tons of carbon equivalent, i.e. the limit of available credits for JI projects, in the commitment period from 2008 to 2012. The following limits apply to each sector (type) of source and limits of reduction in GHG by source (million tons):  

  • energy – 205;  
  • industrial processes – 25;  
  • vehicle usage and other products – five;  
  • agriculture – 30; and  
  • waste and disposals – 15.  

The limit of an enhancement of removals by sinks such as land use, modernisation of land use and forestry is 20 million tons.

In case of insufficient applications relating to one or several sectors (types) of sources or sinks, such limits may be redistributed amongst the other sectors (types) of sources or sinks by decision of the JI Project Centre at the discretion of the JI Committee.

The applicants should be notified of the results, which should then be published on the JI Project Centre website within 10 working days from the date of approval of the JI projects by the Commission.

The Ministry of Economic Development will then submit the list of approved projects to the Government with suggestions for the appointment of a federal executive body to supervise the implementation of the JI project.

5. Approval by the Government

The Government approves or rejects the JI project and appoints a federal executive body to supervise the implementation of the JI project upon the proposal of the Ministry of Economic Development.

Then the Ministry of Econimic Development transfers to the Russian carbon register the data on each JI project. The Russian carbon register takes a decision on reservation of corresponding amount of carbon units for JI project and performs other actions leading to transfer or acquisition of carbon units in line with the requirements of Article 6 of the Kyoto Protocol.

The investor can then start implementing the JI project, and is required to report once a year to a supervising authority appointed by the Government.

Pursuant to the information available on the Ministry of Economic Development’s website published on 22 December 2008, the Government has yet to approve any JI project in Russia. We expect that the first projects will be approved by the Russian Government within the next few months.

6. Conclusion

All the steps necessary to start implementing JI projects in Russia appear to have been taken. The legal acts regulating “consideration procedure” are in force.

The Commission designated with authority to provide initial approvals became active in February 2008.

Five independent expert organisations have been selected and approved to work on JI projects.

Currently there are 31 projects which have been announced and are going through the approval procedure. The Russian Government is in the process of approving JI projects but has yet to approve any projects and therefore no JI project has so far been implemented.

In the light of the credit crunch it is likely that some of the JI projects already submitted for governmental approval will be suspended and the number of new JI projects may decrease.

Nevertheless, this year should be significant for the development of carbon trading projects in Russia as the implementation of JI projects should, we hope, get under way.