1. Gas flaring reduction: contribution from carbon finance
Sectoral policies on GHG emission mitigation
Moscow Carbon Market Forum
April 28-29, 2008
Alexandrina Platonova-Oquab
The World Bank

2. New approaches in the gas flaring reduction policy in Russia
Russian government has been developing a set of measures aimed at gas flaring reduction
Balanced combination of regulatory and economic tools is key
Cumulative positive effect of gas flaring reduction is significant both from the environmental (local and global) and economic perspectives:
One of the major sources of atmospheric pollution in Russia*
currently, gas flaring in Russia is emitting at least MtCO2e per year
*Source : Oil & Gas Journal Russia, March, 2008
Russian government has been developing a set of measures aimed at gas flaring reduction:
[some of which has already been implemented]
Balanced combination of regulatory and economic tools is key [for successful flaring reduction]

3. Oil companies’ programs for gas flaring reduction
APG utilization programs are being developed by oil companies:
Several projects are considered under the framework of the Joint Implementation
Implementation timeline realistically requires several years to meet satisfactory levels of APG utilization

4. Harnessing opportunities through carbon finance
Achieving higher satisfactory level of the AG utilization will take time
Opting for the best available opportunities is key
Some projects will remain uneconomic due to specific barriers
Carbon finance could support the use of most efficient alternatives that often require significant additional investment…
and accelerate the achievement of sectoral goals

5. Demonstrated impact of carbon finance on gas utilization (CDM projects)
Al-Shaheen Gas-to-GPP (Qatar)
APG utilized: 1500 Mln.m3/y
CO2e reductions: 2.5 MtCO2/y
Leveraged investment: USD 260Mln
Tambun Gas-to-LPG (Indonesia)
APG utilized: 260 Mln.m3/y
CO2e reductions: 0.4 MtCO2/y
Leveraged investment: USD 30Mln
Kwale Gas-to-Power (Nigeria)
480 MW CCGT
APG utilized: 600 Mln.m3/y
CO2e reductions: 1.5 MtCO2/y
Indicate the share of Carbon revenues in the investment or to the IRR or in USD how much revenues it represents
Total results for 10 years
GHG emission reductions: 44 MtCO2e
APG utilized: 23.6 Bln.m3

6. Expected benefits of carbon finance in Russian context
Incentivizing project developers to select the Best Available Technologies
Contributing to the implementation of new technological solutions:
Gas conversion to products: GTL, methanol, DME
Gas to reinjection
Switching projects with marginal economics from “-” to “+”
Boosting economics of gas utilization programs grouping APG sources under unique umbrella (scaling effect)

7. Potential role of JI gas flaring reduction in the Russian climate change policy
Project-based mechanisms have provided tool to accurately evaluate baseline and additionally of projects
Confidence in capabilities of Independent Entities in assessing compliance with JI requirements
Carbon finance has demonstrated substantial leverage effect on investment
Carbon finance could strengthen the scope of short and medium term gas utilization activities in Russia
JI window may be closing: could Green Investment Scheme complement JI?