It will be expensive to hide work for warming – Newspaper Kommersant No. 241 (7442) of 12/27/2022

The White House has submitted a bill to the State Duma that imposes penalties on large regulated companies for failing to provide or misrepresenting information on greenhouse gas emissions. The purpose of the bill is to achieve the reliability of state accounting for their emissions. Experts call the document logical, and the fines significant, but note the need to clarify its provisions in terms of sanctions for providing knowingly incorrect information.

The government approved and submitted to the State Duma draft amendments to the Code of Administrative Offenses, which introduce administrative sanctions for failure to provide, provide incomplete or deliberately false information on greenhouse gas emissions by large emitters. Now the regulation, which is in force to fulfill Russia’s international obligations under the Paris climate agreement, requires enterprises that emit more than 150 thousand tons of carbon dioxide equivalent per year to provide carbon reporting from 2022. The deadline for its submission for the current year is July 1, 2023. From 2023, we note, a new, improved methodology for determining the volume of greenhouse emissions will begin to operate. It updates the production processes and activities that produce greenhouse gases, clarifies and concretizes the list of input data for quantifying emissions, and adds a methodology for determining the volume of greenhouse gas absorption. After 2024, reporting on it will become mandatory for enterprises with emissions of more than 50 thousand tons of carbon dioxide.

According to the amendments to the Code of Administrative Offenses proposed by the White House, the absence of a report, as well as its submission in violation of the deadline or with deliberately false information, will result in a warning or an administrative fine on officials in the amount of 35-50 thousand rubles; for persons engaged in entrepreneurial activities without forming a legal entity – from 100 thousand to 250 thousand rubles; for legal entities – from 100 thousand to 500 thousand rubles.

Experts interviewed by Kommersant note that the proposed fines for companies are significant and (although carbon regulation is not actually related to environmental regulation) is commensurate with the maximum environmental fines for violations of waste legislation by companies, although the first version of the bill, which appeared in 2021, assumed that sanctions for companies can reach 1 million rubles. Meanwhile, for enterprises that have never collected and analyzed such data, the costs of preparing relevant reports will be higher than fines. Many large companies in Russia have long been familiar with carbon reporting and have partially automated this process, which will not require large costs. “The bill is expected. First, there was a requirement for mandatory reporting, and then sanctions for its non-compliance,” says Vladimir Lukin from Kept. “Penalties are for incentives. Everything is built on this in our country – we stimulate it with punishment. The criteria for qualifying as regulated entities were published in March 2022. All interested parties could well prepare,” adds Irina Demina from ENV-consulting.

Meanwhile, Ms. Demina notes that it is not clear from the bill what criteria will be used to impose fines of 100,000 or 500,000 rubles. Vladimir Lukin adds that there is uncertainty regarding the criteria for the reliability of the information provided. He believes that further methodological elaboration is needed on how the uncertainty inherent in the quantitative assessment of greenhouse gas emissions will be taken into account, since the bill assumes responsibility for providing knowingly false information. The experts are thus awaiting by-laws that will allow answering these questions and revealing the reporting system methodology.

Kommersant will continue to monitor developments.

Artem Chugunov