President of the Russian Forest Association on the potential of the EAEU single carbon market
The Russian regulated carbon market has just begun to take shape, but by 2025, according to VTB Capital, its turnover will reach $100-300 million a year, and by 2030 - $1.5-3 billion.
- In mid-January, Dmitry Kobylkin, head of the State Duma Committee on Ecology, Natural Resources and Environmental Protection, spoke about the need for Russia to build its own independent carbon trading system.
- At the end of January 2023, the Minister of Economic Development of the Russian Federation, Maxim Reshetnikov, at the seminar of the Eurasian Economic Union (EAEU) on the climate agenda, advocated the creation of a common voluntary market for carbon units for the EAEU countries.
Synchronization of approaches to the climate agenda and the creation of a system of cross-border trading in carbon units in the EAEU will definitely become an incentive to achieve national goals to reduce greenhouse gas emissions and strengthen the positions of the EAEU countries at specialized negotiating platforms, including within the framework of the Conference of the Parties to the UN Framework Convention on climate change (COP).
In order for the single carbon market of the EAEU to start functioning, the countries will have to define common standards, create a system for accrediting project validators and verifiers, and agree on mutual recognition of the results of the implementation of climate projects.
A potential problem for Russian climate projects on international markets is the lack of coordination between the actions of the departments involved in the initiatives and gaps in the legislation. For example, the current version of the Forest Code and 296-FZ actually does not allow businesses to dispose of potential carbon units from the implementation of forest climate projects, since the plots for them are located on the lands of the forest fund, and this is state property. Everything that is grown on these lands is also state property, i.e. a business has no right to own or trade carbon units until the state edits the Forest Code. When this gap is closed, potential carbon units will become the property of private companies.
Updating the legislation is an important measure that will encourage businesses to invest in forest climate projects. The Russian Forest Association consistently advocates updating the regulatory framework at the federal and regional levels.