#11 - RW 287
Moscow Times
December 18, 2003
Editorial
Don't Trade Economy For Kyoto

Kremlin fears that ratifying the Kyoto Protocol might put a dent -- or worse -- in economic growth are well-founded, although not necessarily the way presidential economic adviser Andrei Illarionov explains it.

Illarionov pulled out a dazzling array of charts Tuesday night to explain his case against the treaty and argued that even under his most pessimistic of economic forecasts, Russia would not be able to meet Kyoto restrictions by 2012 and could end up having to buy emissions credits from other countries.

Economic growth is a Kremlin priority, and for good reason. The energy-dependent country is mired in poverty, and President Vladimir Putin has made it clear -- in words if not always in deeds -- that he will do whatever it takes to double GDP by 2010 and raise dismal living standards.

Clean air, on the other hand, is also a good cause.

European countries and Japan have been trying to coax Russia on board by dangling the possibility of making money off of emissions credits. With industrial output -- and, thus, emissions -- way down from Soviet levels, at which emissions quotas were set in the treaty, Russia could theoretically sell unused credits to European countries at a potentially handsome profit.

The problem with this is the credits are a gray area that may or may not benefit Russia -- should they indeed ever materialize.

One can argue that Russia's less stringent pollution controls provide it with a competitive advantage vis-a-vis more developed countries in the EU and elsewhere.

However, Russian industry is notorious for its profligate energy consumption: More modern technology would provide gains in energy efficiency, meaning that GDP growth would not necessarily result in increased emissions.

Indeed, in this day and age the correlation between economic growth and emissions is not as direct as Illarionov would have us believe. Illarionov himself has called for economic diversification away from the pollution-heavy oil and gas industries, and suggested that information technology could become a driving force of the economy. By his estimates, Russia could become the world's fourth biggest IT producer, after the United States, India and China, over the next few years. Greenhouse gases don't play a role in software development.

Cleaning up the air is an important task, but surely the Kyoto Protocol is not the way to go if it means handcuffing Russia's economic growth.

After all, what good is clean air if people have nothing to eat?