By Eurasia Network – June 14, 2021

The House of the government of the Russian Federation, Moscow. Photo credits : Eurasia Network.

The bill adopted on June 1 sets a legal basis for collecting complete and reliable information from organizations on greenhouse gas emissions and will allow companies to effectively monitor the carbon footprint reduction of their products.

In November 2020, the Russian President Vladimir Putin instructed the Federal Government to ensure by 2030 the reduction of greenhouse gas emissions by up to 70% compared to the 1990 level and to create a strategy for the development of the Russian Federation with low greenhouse gas emissions until 2050.

The text was submitted to the State Duma in February 2021 and adopted in the first reading at the plenary session on April 20, 2021. The Deputies definitively adopted the bill in final reading on June 1, 2021, during the plenary session.

The bill sets the necessary legal basis for obtaining complete and reliable information from organizations on greenhouse gas emissions,” the explanatory note says.

To this end, this new law introduced new obligations on companies whose activities generate significant greenhouse gas emissions. They will have to submit reports on their green gas emissions. The criteria for activities will be established by an act of the Government of the Russian Federation.

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The new legislation voted on June 1 is about the introduction of mandatory carbon reporting for the largest emitters of greenhouse gas emissions (more than 150 thousand tons of carbon dioxide equivalent at the first stage until 2024). Such companies will need to report from January 1, 2023.

Legal entities and individual entrepreneurs that generate 50 thousand tons of carbon dioxide per year or more will come under regulation from January 1, 2024. They will have to provide reports on greenhouse gas emissions from January 1, 2025. Reports will have to be submitted by July 1st of the year following the reporting year, to the authorized federal executive body. The procedure and form of the report will be established by the government.

The draft law introduced the concept of “target indicator for reducing greenhouse gas emissions“, which will be set taking into account the absorbing capacity of forests and other ecosystems and the need to ensure sustainable and balanced socio-economic development.

This new bill has given legal entities registered in Russia and individual entrepreneurs the right to implement climate projects aimed at reducing greenhouse gas emissions or increasing their absorption. For this, the criteria for classifying projects as climatic and the procedure for verifying their results will be established. It is assumed that the emergence of this mechanism will allow Russian organizations to reduce the carbon footprint of their products, as well as to involve interested organizations in activities to reduce greenhouse gas emissions.

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Within the framework of the project activity mechanism, carbon units arising from the implementation of climate projects can be introduced into circulation. As noted by the authors of the initiative, carbon units will become a new category of property rights. It is proposed to understand them as a verified result of the implementation of a climate project, expressed in the mass of greenhouse gases, equivalent to one ton of carbon dioxide.

According to Vladimir Burmatov, Chairman of the Committee on Ecology and Environmental Protection at the Russian State Duma, this bill is “the first step in creating a Russian legislation on carbon regulation.”

It will be carried out within the framework of the Russian Federation’s implementation of the Paris Climate Agreement,” explained the official. 

This reform can be also understood as a response to the plan of the European Union to introduce a cross-border carbon tax, which, if Russian companies are not ready to comply with, can threaten their economic activities in the amount of several billions of euros.

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There will be a carbon footprint for every product that moves across the border. If this footprint is significant, it is quite possible that appropriate duties or fees will be introduced by the European Union, which may be discriminatory for Russian domestic producers, putting them in an unequal position with their European counterparts. Thus, Moscow has decided to protect its companies by setting up a new regulation. The bill adopted in first reading on April 20 provides for the introduction of a phased model for regulating greenhouse gas emissions without taxation and mandatory payments.

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