Russia has confirmed that it will not sell its massive surplus of “hot air” carbon allowances onto the world carbon market up to 2012, but has not ruled out doing so in later years.

Like other former Soviet bloc nations, Russia was handed a paper windfall under the Kyoto Protocol when the UN set it a greenhouse emissions reduction target far above its current emissions levels. Kyoto targets are set against a base year of 1990, but eastern European nations had already seen their emissions plummet soon after 1990 as old industry collapsed along following the demise of the Soviet Union.

There has long been speculation over how much of its emissions surplus Russia would sell, and the government has been under international pressure not to flood the market and undermine real emission-cutting actions in other countries. A bloc of African nations called for a commitment from developed nations at the current UN climate meeting in Poland to refrain from using these surplus allowances. They are known as AAUs and are issued by the UN to governments.

But Victor Blinov, the deputy head of Russia’s delegation at the conference, has stated in an interview with Bloomberg that all the AAUs would be banked for possible future use in the next climate agreement due to take effect from 2013.

Blinov said that the surplus would held back to prevent climate regulation from limiting economic growth, an indication that Russia continues to put action on climate change second to the economy.

However, selling the surplus also has a downside for Russia that is likely to have figured in its decision. Flooding the carbon market would see a collapse in prices that would make dirtier-burning coal more attractive as an energy source in Europe relative to gas, thus undermining the massive natural gas export market Russia enjoys with its neighbours.

Bloomberg, Earth Negotiations Bulletin 4.12.08

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