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The Russian government has proposed new draft legislation on greenhouse gas emissions, which, if implemented, could have serious financial implications for companies with sizeable emissions.

The draft law was introduced by a new climate team in the Russian government, and appears to be bringing Russia's climate policy, sometimes regarded as counterproductive, more into line with international standards. For example, Russian regulators are expected to accept the new reporting obligations agreed to at the United Nations Climate Change Conference in December, 2018. This may correct some of the disadvantages Russian exporters have faced for not having an internationally-accepted methodology for reporting emissions.

The new legislation also gives the first indication that the Russian government will be imposing individual emission limits (and charges) on companies. It has already been criticized by the Russian Union of Industrialists and Entrepreneurs for giving the government powers to impose such limits and charges.

What the new draft legislation says

The draft law was prepared by the Ministry of Economics, and is officially titled "On State Regulation of Greenhouse Gases Emission and On Introduction of Amendments to Certain Legislative Acts of the Russian Federation."

While it does not contain any direct regulation, the draft law provides the Russian Government with the following powers and authorities:

  1. to determine which greenhouse gases (hereinafter - the "GHG") will be subject to state regulation;
  2. to establish limits on GHG emission;
  3. to determine the criteria under which the related activity of legal entities and individual entrepreneurs will be subject to state regulation;
  4. to determine the limits for issuance of GHG emission permits, the terms and procedure for submitting reports on GHG emissions, the specific cases requiring verification of (i) GHG emission reports and (ii) reports on realization of GHG reduction projects, and the procedure for such verification;
  5. to establish requirements for transactions with GHG emission reduction and absorption units;
  6. to set fees for GHG emissions and a relevant procedure for collecting such fees;
  7. to approve the rules under which a realization of GHG reduction projects is to be treated as GHG emission reduction;
  8. to establish federal and regional reporting criteria; and
  9. to establish further responsibilities in the field of GHG emission.

Under Russia's "Plan for the improvement of state regulation of GHG emission and preparation for ratification of the Paris Agreement" the Draft should be adopted by June 2019.

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