Belarus, a riddle, wrapped in an enigma, wrapped in controversy
Nov 16, 7:41 AM
Followers of the tectonic struggles of the great powers probably do not spend too much time worrying about Belarus. Wedged between Russia and the European Union, this former part of the Soviet Union is not deeply involved in world environmental affairs. It is, however, raising an interesting conundrum for climate politics.
Belarus did not ratify the United Nations Framework Convention on Climate Change (UNFCCC) until 2000, eight years after it was agreed. This meant that when the Kyoto Protocol, which is an offshoot of the UNFCCC, was negotiated in 1997, Belarus was not among the negotiators. It is therefore not in the Kyoto Protocol?s Annex B, and has no target for emission reductions. This leaves it in a kind of limbo?now that it has ratified the Convention, it is an Annex I country, which means that it cannot benefit from developing country mechanisms such as the various funds or the Clean Development Mechanism. But without a target neither can it participate in Annex I mechanisms such as emissions trading or Joint Implementation.
In the meantime, Belarus has now ratified both the Convention and, last year, the Kyoto Protocol. Its delegation is now asking to adopt an emissions target and to play a full role in the Protocol. Other countries are taking this offer cautiously. So why does Belarus now want to participate where it didn?t before? And since it does, why might other countries not welcome it?
There are two reasons why Belarus might want to play a fuller role in the Kyoto Protocol. First, its relations with other countries are not uniformly smooth. More active participation in an important international process offers an opportunity to put its international relations on more constructive footing. Second, Belarus has realized that it could potentially gain significant new financial flows if it could take part in international emissions trading. Assuming it is treated in a similar way to its fellow former-Soviet states, its target would very likely leave it with a tasty surplus of emission rights (known in the usual impenetrable jargon as Assigned Amount Units, or AAUs) which it could in principle sell to other countries that fall short of meeting their emission reduction commitments.
So far so good, you might think. Welcome a strayed lamb back into the fold and bring more AAUs into the Kyoto system - why not? But that surplus is precisely what is making some countries hesitate. To understand why we need to revisit a perennial bugbear of the Kyoto system "hot air".
When the Kyoto Protocol was negotiated in 1997, rich countries and the former communist states were given emission reduction targets from a baseline set in 1990. For most OECD countries this meant that some early emission cuts would thereby be rewarded but that the resulting target still meant making real efforts to keep emissions down. However, the picture was very different for the economies in transition (EITs), as the former communist world was known. They were mainly given targets of stabilizing emissions at 1990 levels. However, the collapse of communism in 1989-91 had led to the closure of vast swathes of inefficient, uneconomic, and heavily-polluting industry in the EITs. As a result, by 1997 their emissions had dropped dramatically from 1990 levels - in some cases by nearly 50% - and the allocation therefore left them with a huge tradable surplus of AAUs. This was understood when the negotiations took place and was essentially a financial inducement for the EITs to agree to the Protocol. Since the group included such giants as Russia and the Ukraine, rich countries considered this as a price worth paying. The availability of such cheaper AAUs also alleviated US concerns about the cost of meeting their targets.
The EITs had a good case for getting some financial support. First of all, the collapse of communism had left their economies in terrible shape - or, perhaps more accurately, revealed what terrible shape they were in already. At the same time, their energy infrastructure was in the main much less efficient than in their rich country counterparts, which meant that there was plenty of scope to cut emissions cheaply. Some referred to Russia as "the Saudi Arabia of energy efficiency."
However, so deep was the economic collapse of the EITs, and so large are they, that the over-allocation of AAUs left a huge supply of tradable credits that could, through the trading system, allow countries to meet their emission targets while making no real emission reductions. The withdrawal of the United States, which was expected to provide much of the demand for these AAUs, meant that there was a real prospect of this over-allocation swamping all efforts to reduce emissions in rich countries. The term "hot air" was coined to describe the surplus, reflecting the sense that, far from being a legitimate part of the trading system, it was a fraud to undermine climate policy.
Still, it was part of the deal, and the participation of Russia in particular was essential to bringing the Kyoto Protocol into force. For many countries however, hot air was a necessary evil. It was certainly not something they embraced gladly.
Which brings us back to Belarus. It has undergone the same economic collapse and restructuring as the rest of the Soviet Union, and its enthusiasm for taking a target is based on the expectation of hot air on similar terms. It is requesting a target of 5% below 1990 levels, while in 2000 its emissions were 45% lower than in 1990. Even allowing for growth between 2000 and 2012, this means a major allocation of hot air. Estimates bandied about at the moment range from 30 to 50 million tons of CO2 through the commitment period. Even at moderate prices this means financial transfers in the hundreds of millions of dollars if Belarus can find a buyer.
The problem for Belarus is that the Kyoto Protocol is already in force, and the major post-Soviet countries are already in. For many countries therefore the problems of Belarus' participation - even more hot air sloshing around in the system - is not outweighed by many obvious advantages. And with diplomatic relations strained at the best of times (the EU maintains visa bans on top-level Belarus officials) there is little sign of an early push to do Belarus a favor. For the time being, Belarus is on a charm offensive, but there is not much sign of a quick decision. Whatever the technical details of the climate negotiations, bigger realpolitik is never far away.
Labels: economics and policy mechanisms