Russia Scraps "Climate Change Plan" After Uproar From Businesses

The Russian government has abandoned key provisions of a new "climate change" legislation package after the country's leading businesses - most operating in the "not quite" ESG arena - mounted a significant protest, according to Russian daily Kommersant (via the Moscow Times).

The abandoned legislation included quotas on carbon emissions at Russia's largest companies, along with a national carbon trading system and strict penalties for the country's worst polluters. All that remains of the proposals are a plan to measure and collect emissions data as part of a so-called 'green audit' lasting five years.

The campaign against a stricter package of measures was led by the influential Russian Union of Industrialists and Entrepreneurs (RSPP) — one of the main lobbying groups for Russia’s largest businesses. The new laws were set to be introduced as part of Russia’s ratification of the Paris Climate Agreement.

Originally, the Russian government proposed introducing new climate legislation in two phases. The first would be a five-year stock-taking exercise to measure company-level emissions and set appropriate quotas for reducing emissions. After that, Russia would then introduce a carbon cap on the country’s biggest polluters and penalties for those that exceed their quotas. Earlier plans also envisaged the creation of a national fund to support emissions reduction and a system of nation-wide carbon trading. -Moscow Times

After the RSPP's lobbying efforts, the entire second phase was killed off, as the group successfully argued that the government should wait for the results of the climate audit before new laws and regulations affect various companies.

"The idea of putting a price on carbon dioxide in Russia has fallen victim to the industrial lobby," noted VTB Capital analysts in a Thursday research note, despite that "the Paris Climate Agreement envisages a greenhouse gas emission target which is higher than Russia’s current emissions. So introducing the quota system is unlikely to be punitive for businesses."

The gutted climate package effectively puts "any actively managed efforts by the government to reduce emissions on ice," they added.

And according to Mikhail Yulkin, Director of the Center for Environmental Investment told Kommersant, "It is obvious that Russia needed to join the Paris climate agreement only to create a better image and divert attention away from the domestic political events inside Russia over the summer."

"But the model on which the Russian economy has been based for the past 20 years is dying. Everybody needs to find a way to move money into low-carbon areas of the economy. Under the leadership of Rosneft and Gazprom, this cannot be done."