By David Wishard<\/p>\n
For several years now, Alexander Bedritsky, scientist and Putin\u2019s appointed Presidential Delegate to the International Panel on Climate Change (IPCC), has been voicing concern over Russia\u2019s melting permafrost and the threat it poses to the global climate balance. He could not have asked for a better rallying event than the sudden spectacular birth of the Yamal crater. This past July, a 100-foot wide section of Siberian taiga burst open on Russia\u2019s Yamal Peninsula. This anomaly was the result of underground pockets of methane fed by years of Siberia\u2019s slowly melting permafrost.<\/p>\n
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Methane is one of the most potent greenhouse gases regularly emitted by developed nations. According to Nature<\/em>, one ton of methane prompts 21 times the amount of \u201cclimate forcing\u201d over a ten year period as one ton of CO2 in 100 years. Reducing global methane emissions has thus remained a critical priority for international bodies in which Russia and the U.S. are pledged to collaborate: the UNFCCC Secretariat, the Global Methane Initiative (GMI), and the Arctic Council.<\/p>\n \u00a0The role of Russian oil & gas<\/strong><\/p>\n World Bank data posit that Russia emits anywhere from 7-10% of the world\u2019s \u00a0anthropogenic, or human-caused, methane. This places it squarely in the world\u2019s top five methane-emitting countries (China is the first, followed by the U.S. and then India). By Russia\u2019s own governmental figures, two thirds of these emissions come from the oil and gas industry. In the oil industry specifically, dominated by state-owned Rosneft, emissions come in the form of associated petroleum gas (APG), a methane-rich byproduct of the oil extraction process. Without cost-effective means to convert APG into marketable products, or sufficiently strict regulation, oil companies have little incentive not to simply \u201cflare\u201d off the gas.<\/p>\n Still,\u00a0even perfectly efficient flaring does not erase APG\u2019s threat to the climate. Combusted APG turns into black carbon soot, another agent of climatic warming. Until the diplomatic freeze precipitated by Russia\u2019s invasion of Crimea, black carbon abatement was the subject of a multiyear, joint EPA-Gazprom pilot program in Murmansk.<\/p>\n In 2009, the World Bank revealed that the Russian government\u2019s methods of calculating its flares were not comprehensive, and that Rosneft and Gazprom flared amounts far beyond Russia\u2019s government-mandated 5% threshold. It is unclear if this was due to market reasons or because of selective enforcement, but it is clear that Russia flared a higher proportion of its APG than any country in the world, three times more than it stated in the national emissions calculations it submitted to the IPCC that year.<\/p>\n Fining yourself poses certain incentive problems<\/strong><\/p>\n Russia was embarrassed by the World Bank\u2019s revelations, and reacted by demanding that all Russian oil producers recycle, or \u201cutilize\u201d, 95% of their APG, or face stiff fines from the Ministry of Economic Development (MED). Within a few years, several smaller oil companies actually achieved 95% utilization. However, Rosneft and Gazprom, by their own figures, only managed recycling rates of 53% and 60%, respectively. The MED increased APG flaring fines in 2012, but recycling rates among the state giants have only marginally improved.<\/p>\n A 2013 joint study by the EPA, the Department of Energy, and Gazprom concluded that market incentives to monitor, let alone recycle, APG are simply lacking. At present, a shortage of technology and capital (dramatically compounded by European and U.S. sanctions) and dispersed ownership of infrastructure assets are key obstacles for any energy company in Russia claiming to take charge of its APG emissions, particularly oil companies. Russia\u2019s erratic gas prices and byzantine emissions fines prevent potential foreign green-energy investors from determining a clear \u201cprice of emission\u201d with which to assess the viability of investing in Russian technological innovation. \u00a0\u00a0 \u00a0 \u00a0 \u00a0<\/strong><\/p>\n Of course, there is an equally plausible and more obvious explanation for Russia\u2019s poor flaring record:\u00a0 Russia fines its own state enterprises only when it is convenient to do so.<\/p>\n A market for carbon credits? That\u2019s so last decade.<\/strong><\/p>\n The years 2009-2012 corresponded to a bygone, \u201cpro-Kyoto\u201d phase in Russian politics when the state wanted to attract foreign energy efficiency\u00a0 investments by selling its ample carbon credits. Russia never had a coherent, sustainable policy to control methane emissions.\u00a0 The fragmentation and complexity of Russia\u2019s environmental fines indexes epitomizes a fragmented regulatory system in perpetual flux. Environmental fines are reactive: the Duma changes existing fines or issues new ones in response to fleeting political and\/or market periods when there are incentives to do so. The EPA study suggests that the 95% reutilization law (again, passed in 2009) was a reaction to the World Bank\u2019s satellite revelations, for which Russia lost face at the UN during a critical political period.<\/p>\n Russia has since publically refused further Kyoto commitments, and what new reduction commitments it has made are independent of the Kyoto process and are primarily verbal. \u00a0Combine this lack of will with more proximate concerns like Western sanctions, the global oil price drop, and the rapidly decreasing ruble-to-dollar value, and it appears that for the foreseeable future Russia\u2019s will to invest in greening itself is dead.<\/p>\n Rosneft and Gazprom\u2019s emissions records: some improvement, but a long way to 95%<\/strong><\/p>\n Rosneft\u2019s 2012 statistics show that the company utilizes 53% of its APG, one of the lowest ratios of any Russian oil producer. It admits to doubling its total flaring from 3.5 to 7 billion cubic meters from 2006 to 2011. The majority of the growth comes from Rosneft\u2019s buildup of it massive Vankor oil field in Eastern Siberia, slated to become Russian primary oil conduit to China.<\/p>\n Couldn\u2019t Rosneft just use all the surplus gas\u00a0to produce and sell power? There is some evidence that Rosneft sees value in selling electricity in this fashion. The company recently acquired gas processing infrastructure in Central Siberia from TNK-BP and SIBUR. However, the taxes imposed by selling electricity on the Russian grid will make selling the power unprofitable. In Eastern Siberia, Rosneft does not bother trying to see its APG, it simply uses it to heat and light Vankor\u2019s facilities. However, Vankor also injects its APG into hydraulic fracturing wells, a dubious \u201csolution\u201d to the problem of excess APG that Rosneft may have learned from the US. Add the roadblocks to selling electricity in Russia to the fact of China\u2019s lower than expected buying prices for gas, and what remains are nearly zero, non-regulatory incentives for Rosneft to utilize APG beyond the bare minimum it needs for heat and light.<\/p>\n Gazprom appears to be in a much better position to utilize APG, which is typically shed in transit when processing gas. Gazprom can link its oil and gas franchises more easily, especially in traditional gas extraction areas where it has existing infrastructure. \u00a0The EPA study lauds Gazprom for large investments to improve its gas pipeline infrastructure, which reduced its methane emissions by at least 35 million cubic meters in 2011 alone. Overall, Gazprom claims a 60% utilization rate as of 2012. The company has also been working with SIBUR in Khanty-Mansi and Yamalo-Nenets, where it intends to bring its overall percentages up to the golden 95% by 2016. Gazprom\u2019s oil subsidiary, Gazprom Neft, launched an APG initiative in 2010, and brought its APG utilization rate up from 55% to 80% within three years.<\/p>\n The few surviving NGOs are applying slow, steady pressure<\/strong><\/p>\n One of the sole sources of legitimate pressure to curb methane emissions is the effort of NGOs, particularly WWF-Russia, to convince the government that utilizing APG is profitable. WWF tirelessly compiles annual reports on major Russian energy industry development, and has made it a point to sell the monetary benefits of APG utilization to its highly-placed audiences. APG can be converted not just into electricity, but into marketable commodities like synthetic natural gas, PVC, and glass (according to WWF, Russia produces approximately 10 times fewer recycled APG than the US). At present, WWF and Creon, a Russian consulting firm specializing in chemical reprocessing, are preparing a statistical analysis of state energy firms\u2019 APG-efficiency records. Such efforts may go far to convince industry (or in Russia\u2019s case, the state) of the monetary value of recycling and\/or reselling their APG.\u00a0 \u00a0<\/strong><\/p>\n In the near- to medium-term, Russia is unlikely to concern itself with state- companies\u2019 methane emissions. From the activist perspective, the fight against greenhouse gas emissions lacks the luxury of direct, observable public health threats that would shock the system into reform. Viable paths for using APG to bolster Rosneft\u2019s bottom line seems a distant dream, and foreign investment is not going to come anytime soon, either.<\/p>\n Russia\u2019s withdrawal from the Kyoto process, in spite of Putin\u2019s stated desire to reduce Russia\u2019s greenhouse gas emissions beyond Kyoto\u2019s demands, has dealt a perhaps fatal blow to the Russian carbon-credit-based foreign direct investment. \u00a0This is doubly true now for sanctions-affected industries, oil and gas being primary among them. The country\u2019s complete dependence upon raw syr\u2019yo<\/em> means that any reform of the country\u2019s methane record is going to have to come at someone else\u2019s expense.<\/p>\n <\/p>\n David Wishard is a graduate student in the Ellison Center for Russian, East European and Central Asian Studies (REECAS) and the Evans School of Public Affairs. His research focuses on Russian environmental policy and international collaboration in the Arctic. He recently completed an internship at the U.S. Embassy in Moscow, and has traveled in Russia several times. He lives in Seattle and is currently completing his thesis. <\/em><\/p>\n","protected":false},"excerpt":{"rendered":" For several years now, Alexander Bedritsky, scientist and Putin\u2019s appointed Presidential Delegate to the International Panel on Climate Change (IPCC), has been voicing concern over Russia\u2019s melting permafrost and the threat it poses to the global climate balance. He could not have asked for a better rallying event than the sudden, spectacular birth of the Yamal crater. This past July, a 100-foot wide section of Siberian taiga burst open on Russia\u2019s Yamal Peninsula. This anomaly was the result of underground pockets of methane fed by years of Siberia\u2019s slowly melting permafrost.<\/p>\n