After years of debate, the Russian cabinet has approved the Kyoto Protocol on global warming. It is currently progressing through the Russian parliament, and will then go to president Putin, but final approval is fully expected to be a formaility. With Russia’s ratification the Protocol will achieve the required 55% proportion in terms of global emissions and of signatories to bring it into force around the world.

Although president Putin has not commented, his leading economic advisor, Andrei Illarionov, an opponent of the treaty, said that the decision had been taken for political reasons and that the task would now be to minimise “the negative consequences for Russia.” He said that compliance would slow Russia’s economic growth and make it impossible to meet Putin’s stated goal of doubling Russia’s GDP within a decade. “It’s a political decision, it’s a forced decision,” he said, “It’s not a decision we are making with pleasure.”

However, German Gref, the economic development minister, said that the treaty was a “progressive step”, but that “it will hardly be decisive in radically improving the environmental situation.” He said that in his view, it was unlikely to damage Russia’s economic growth.

Vladimir Azkharov, director of the Centre for Russian Environmental Policy, said in December 2003 that Russia would “never” sign the treaty. However, in May, Putin promised to speed ratification in return for support from the European Union for Russia’s bid to join the World Trade Organisation.

If Russia duly signs, it will leave just the USA and Australia as the only two developed countries that have not signed.

*Russia’s ratification will release a torrent of greenhouse gas credits and unlock a billion-dollar industry, according to policy analysts ICF Consulting. Once the deal comes into force, countries signed on to the pact will have until 2012 to cut their collective emissions of six key greenhouse gases by at least 5% below 1990 levels.

ICF this week said Russia’s oil and natural gas, coal mining, power generation, and metallurgy sectors are ripe for investments that will lead to major cuts in greenhouse gas emissions.

ICF’s Russian office estimates there will be 350 million metric tons of carbon dioxide equivalent credits per year within these and other energy- and carbon-intensive sectors in Russia, potentially worth billions of dollars. To cash in on this potential, however, Russia needs to shore up its climate change bureaucracy by, among other things, developing a registry to authorize “green investment” projects.

Russia is expected to have plenty of spare credits – called “hot air” – in the early phase of Kyoto implementation because emissions targets are based on 1990 levels, which Russia has since beaten. Some analysts however worry that ratification, while an economic boon for Russia, has the potential to oversupply the emissions market and depress prices. Others say that the timing of projects that will generate credits will be staggered over time, so not all the credits will hit the market at once.