Russia will likely sell up to 6 million Kyoto rights this quarter, a Sberbank official said.

The deal, the first time the country has entered the market in assigned amount units (AAUs), will be structured differently from previous AAU

“We may sign pilot projects involving 5-6 million AAUs in the first quarter of the year,” Sberbank’s Vsevolod Gavrilov said on the sidelines of
a conference in Vienna today.

State-owned Sberbank, Russia’s largest bank, was appointed by the government last year to monetise Russian AAUs.

The initial deal involves both European and Asian buyers, said Gavrilov, who is the head of the bank’s project management department in
energy saving and nature management.

He said that Sberbank is in talks with governments as well as private companies over the sale of around 100 million AAUs.

But the government has not placed a limit on the amount of units which could eventually be sold from the Russian AAU surplus.

“There is no limit to sell,” he told Point Carbon News.

Russia is expected to have over 6 billion surplus AAUs from Kyoto’s first commitment period but had given assurances that it had no intention
to sell “significant volume”.

GIS alternative

Addressing the Austrian JI/CDM Workshop, Gavrilov told delegates that Russia will not offer the AAUs with a guarantee system enshrined in
law but Sberbank itself will be the guarantee.

Other AAU seller countries, such as the Czech Republic or Hungary, have set up green investment schemes (GIS) to ensure cash from AAU
sales are spent on climate-friendly projects.

But Russia has opted to instruct Sberbank to pool projects with measurable emission reductions first and use AAUs as an incentive for the
initiatives to materialise.

“We want AAUs to be catalysts in the procedure,” Gavrilov said.

The bank’s idea is to offer developers up to 15 per cent of the cost of the carbon-cutting projects and sell enough AAUs to cover the planned
emission reduction.

Hard greening

Gavrilov said the bank had so far selected projects worth €4 million with an emission reduction potential of 100 million tonnes of carbon dioxide equivalent.

He reckons Russian AAUs will be attractive to investors due to their strong connection to emission reductions.

The quality of AAUs have been traditionally determined by how many emissions are reduced per AAU.

A GIS could include hard greening projects close to the 1:1 ratio, while soft greening initiatives are less efficient.

“We offer hardcore greening,” Gavrilov said referring to a quality ratio under the Sberbank plan of 1:1.


He said the Russian government opted for the alternative method of offering AAUs because of its different situation compared to most seller

Russia does not have an emission trading system for companies, nor does it provide incentives for renewable energy and energy efficiency
projects, Gavrilov explained.

That is why the bank wants to use AAUs to attract investment energy saving projects in industries such as steel, oil and coal, as well as
initiatives for improving the efficiency of power plants and green building schemes.

By Marton Kruppa –