February 2010

Russia Announces First JI Tender

Russia Announces First JI Tender

Russia appeared to have abandoned its plans to use the Kyoto mechanisms. Even so, in bilateral talks held since autumn 2009, Russia has signalled that it is still seriously interested in participating in the carbon market during the first commitment period. The legal basis allowing it to do so was created back in autumn 2009 – at government level with Decision No. 843 of 28 October 2009 and subsequently at Ministry for Economic Development level with Decision No. 485 of 23 November 2009.

This was the basis on which the first tender was issued last week, with a volume of 30 million ERUs. Russia has some 110 projects in the JI project pipeline and these are now much closer to actually being implemented. The pipeline includes a number of JI projects with German involvement. Businesses with JI projects that have already passed through the determination process should participate in the current tender.

Although the outlook for new JI projects is fraught with risk pending the outcome of the international climate negotiations and a decision on the second commitment period, the issue continues to be addressed in bilateral meetings. The main concern at the moment is whether JI projects will actually be approved at the end of the first tender.

The Tender

The tender is being managed by Sberbank, an authorised operator of carbon units. Sberbank receives project proposals and evaluates them.

Projects will be considered for the following sectors:

   1. Energy
   2. Industrial processing
   3. Solvents and other products
   4. Agriculture
   5. Waste management
   6. Forestry

The tender will run for a total of 85 days, including the announcement period:

• Within 25 days from the date of announcement, 16 February 2010, project proposals may be submitted free of charge. The necessary documentation is listed in Annex 2 of the tender. Supplementing documentation may also be submitted.
• Upon receiving the project documentation, Sberbank in its capacity as operator will decide within 5 days whether the project is eligible for the selection process.
• In a subsequent evaluation phase, the operator will within a period of 45 days evaluate the projects according to predetermined criteria and then pass them to the panel of experts.
• The panel of experts must make a decision on whether to approve the project and a recommendation to the Ministry for Economic Development within 10 days.
  

The Selection Criteria

The selection criteria comprise three components of differing weighting:

• Criterion 1
  Energy efficiency and environmental effectiveness: The project will be compared with the use of the best available technology. Between 1 and 5 points can be awarded for this criterion.
  
• Criterion 2 
  The project proposer’s technical and financial resources: The Russian government places importance on projects ready for implementation for which investors have already been found. Again, between 1 and 5 points can be awarded for this criterion.
  
• Criterion 3
  Economic and social impact of the project: This can earn between 0 and 3 points.

In this evaluation process, project proposals can be awarded a maximum of 13 points and, in the worst case, score only 2 points.

The tender documents are available on the Sberbank website.

Further Information:

Sberbank tender documents (in Russian only)