EU-Russian Climate Cooperation: Towards a Post-2012 Low Carbon Investment Regime Anatole Boute
Structure of the argument EU external climate policy towards Russia Challenges to low carbon investments in Russia EU sponsored international regulatory initiatives: ECT Protocol on Energy Efficiency Kyoto Protocol International Partnership for Energy Efficiency Export of the acquiscommunautaire Assessment and way forward
The EU external climate policy “Moral commitment” historical carbon debt and import of carbon intensive goods Security of supply necessity to guarantee availability of energy, in context of increasing competitiveness for energy resources Competitiveness international diffusion of climate/energy efficiency/renewable regulation can support the EU industry
EU climate policy in relation to Russia “Moral commitment” carbon cost of EU energy security: gas-coal switch, gas flaring Security of supply energy savings in Russia to ensure energy exports Competitiveness huge market potential for low carbon equipment cooperation in achieving climate targets at least cost
Regulatory challenges to low carbon investments Financial level playing field for low carbon investments Declarative nature of regulation Insufficient implementation / enforcement Instability and unpredictability of investment climate
EU sponsored international regulatory initiatives Energy Charter Treaty Protocol on Energy Efficiency Financing? market-oriented price formation full reflection of environmental costs BUT “in an economically efficient” / “cost effective” way appropriate to states’ own energy conditions
Declarative nature ? “strive to minimize” environmental impact of energy “strive to ensure” that energy efficiency policies are coordinated Implementation? Russia and the ECT Investment stability? investment chapter of ECT BUT focus on traditional political risks for traditional energy investments
Kyoto Protocol Financing? flexible mechanisms: Joint Implementation BUT - possibility to “greenwash” hot air under JI “track I” - post-2012 ban
Declarative? binding emission reduction targets BUT Russia’s post-2012 stance Enforcement? compliance mechanism Investment stability? Kyoto is about investment promotion not protection
International Partnership for Energy Efficiency Declarative? EU idea: mandatory energy efficiency standards and targets Outcome: voluntary partnership based on exchange of information, best practices, joint research.
Export of the EU acquiscommunautaire Declarative? mandatory targets for RES but indicative for efficiency impact of low carbon prices on effectiveness of EU ETS Implementation? will the renewable energy targets be met? Stability? changes to renewable energy support schemes intervention with the ETS
Joint projects with third countries under the RES Directive Financing? mainly directed at helping EU Member States to achieve their target at least cost (import of RES-E) Implementation? linked to EU RES targets Stability?
Assessment Non-binding character of existing instruments Indicative targets Loose cooperation rather than compliance and responsibility No clear protection against regulatory changes
Possible way forward Instability/unpredictability holds back modernisation main concern of low carbon investors: regulatory changes EU and Russian regulation governing low carbon investments are characterised by similar deficiencies take an investor perspective to depoliticise the debate Focus on regulatory stability for low carbon investments common rules to tackle common investors’ concern
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