Greenpeace Russia: Siberian Wildfires Are Planetary Disaster

49754589_303A satellite view of the forest fires in Siberia, July 21, 2019. Courtesy of Deutsche Welle

Wildfires in Siberia becoming a planetary-scale disaster
Gismeteo
July 29, 2019

Grigory Kuksin, the head of Greenpeace Russia’s firefighting project, called wildfires in Siberia and the Far East a planetary-scale disaster.

Smoke from fires usually moves east or north, but this time it is moving west. Thus, the smoke has engulfed Siberian cities and has reached the Urals. The smell of burning is reported in the Volga Region and Tatarstan.

The wind that changed its direction is expected to bring the smoke to Kamchatka. It may even reach other continents across the ocean, which means it will become a planetary-scale disaster.

Kuksin believes that the smoke will continue to affect the region for a few more weeks. Heavy rain is needed to extinguish such a large fire, but no precipitation is expected.

The expert believes it necessary to reconsider the area of control and implement special measures to avoid similar situations in the future.

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Why There Are So Many Forest Fires in Russia
The scale and aftermath of the disasters are exacerbated by the consumerist mindset of authorities and the lack of resources in a weak economy
Vladimir Ruvinsky
Vedomosti
July 29, 2019

Dense smoke from forest fires has covered cities in Siberia, the Urals, and the Volga region. The fires could have been dealt with at an early stage, but regional authorities avoid fighting fires when they can avoid it due to a lack of money and means.

According to Greenpeace Russia, the fires have encompassed over three million hectares of forest, an area comparable in size to Belgium. The total for the spring and summer of 2019 is eleven million hectares, an area larger than Portugal. During this century, 2003 and 2012 saw worse fire seasons, but Grigory Kuksin of Greenpeace Russia says the records set during those years will probably be beaten this week. Usually, the smoke from the fires drifts towards the sparsely populated east and north. This year, however, the fires have attracted more attention since the smoke has drifted westwards, towards Novosibirsk, Yekaterinburg, Chelyabinsk, and Kazan.

The current fires are largely a consequence of decision-making by Russian authorities. More than 90% are the burning fires are located in so-called monitoring zones, areas where regional authorities may not fight fires if the expenditures on extinguishing exceed the damage they cause. This regulation was adopted in 2015 when Russian federal authorities basically legalized what had been an implicit rule during Soviet times. But the Soviet authorities had, in fact, fought fires in remote areas. Nowadays, regional governors are not officially obliged to fight them. They take advantage of this, especially because they lack money and equipment.

While Russia has lots of woodlands, its economy is too week to fight all forest fires. Kuksin argues that the gigantic monitoring zones could be decreased while increasing prevention measures and using available resources to better effect. Most fires are caused by people: they are mainly sparked when loggers burn residue wood in logging areas.  Such fires could definitely be put out immediately, but local authorities have made a practice of refusing to fight them. They are the major cause of the biggest fires, which have turned into insoluble problems that only the rains can solve.

The way the authorities see things, the anticipated costs of putting out fires in the monitoring zones are always higher than the damage caused by them. The damage caused by forest fires is primarily calculated in terms of the minimum price of timber. This cost can be written off (and if not, there is no damage), i.e., forest fires often cost almost nothing in terms of official damages. However, as Konstantin Kobyakov, an environmentalist at WWF Russia, points outs, Russia loses three times more forest in fires annually (three million hectares) than the forest industry removes (one million hectares), meaning the country already faces a deficit of woodlands that will only keep growing.

Kuksin recalls that gas and oil industry infrastructure, such as pipelines, is located in the monitoring zones, and uncontrolled blazes are approaching hundreds of villages and small towns. Damage assessment does not account for air and water pollution or the real harm caused to people’s health by acrid smoke, which is harder to calculate but does considerably increase mortality. In addition, stable high-pressure systems have formed over the gigantic fire zone in Siberia, triggering abnormally heavy rains along the perimeter. The fires generate a lot of greenhouse gases and soot, which accelerates the melting of arctic ice and climate change, meaning they increase the risk of more fires in the future.

Translated by the Russian Reader

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A Certifiable Genius

Monument to Konstantin Tsiolkovsky, Petersburg, July 18, 2015
Monument to Konstantin Tsiolkovsky, Petersburg, July 18, 2015

The pioneering Russian rocket scientist Konstantin Tsiolkovsky was, undoubtedly, a certifiable genius.

The amount of carbon dioxide in the atmosphere is quite small (0.03%), which does not facilitate crop yields. Its quantity could be increased 30 times (to one percent) with great benefit to plants and no harm whatsoever to man. The gas is not poisonous, and an abundance of it in the atmosphere would only hinder its secretion from the lungs. One percent would cause almost no hindrance, even if we are talking about human lungs.
—Konstantin Tsiolkovsky, “The Future of the Earth and Mankind” (Kaluga, 1928)

Photo and translation by the Russian Reader

Hooked

Stuck on the needle: oil and gas account for 98% of Russian corporate profits
Pavel Miledin
September 24, 2015
rbc.ru

RBC’s rating of the 500 largest Russian companies shows the real value of the oil and gas industry to the domestic economy. The contribution of all other companies to total gains—46 billion rubles in 2014—amounted to less than two percent

Andrei Molodkin, Hope, 2009. Acrylic block filled with Russian crude oil, edition of eight, 56 x 20 x 11 cm. Image courtesy of priskapasquer.com

According to Rosstat, Russia exported almost 500 billion dollars’ worth of goods in 2014; oil and natural gas accounted for 42% of this sum. In 2014, oil and gas revenues accounted for 7.4 trillion rubles or 51.3% of the country’s budget. If you look inside the corporate sector, the dependence on the oil and gas sector is even more impressive.

According to data from the RBC 500, a rating of the largest Russian companies, released on Wednesday, the total revenue of oil companies in 2014 amounted to 19.8 trillion rubles or 35.3% of the total revenue of all the companies in the rating, but 97.7% of all net profit, or 1.98 trillion rubles. All other sectors accounted for a mere 46 billion rubles of net profit. If only net profit is taken into account as the outcome of domestic business activity, there are, essentially, no other industries in Russia.

Our Everything
According to Oleg Buklemishev, director of the Economic Policy Research Center at the Moscow State University economics department, the date once again reveal the key story of the interaction between the Russian economy and the state, the agent that redistributes oil revenues.

“The whole history of attempts to diversify the economy has come precisely to this,” says Buklemishev.

This once again confirms that talk of diversifying the economy has just been talk, he adds.

Andrei Movchan, director of the Economic Policy Program at the Carnegie Moscow Center, thinks there is nothing unusual about all this.

“Russia is an exporting country, and all other sectors of industry dwell in the shadows of the oil industry,” he says.

According to Movchan, this is particularly noticeable during a crisis, when currency prices for commodities continue to allow the oil sector to profit.

The oil and gas sector’s net profit in 2013 was also huge, but not to the same extent. Then it amounted to 79.2% of the overall net profit of companies listed in the RBC 500.

“The devaluation of the ruble is having an impact,” explains Natalya Orlova, chief economist at Alfa Bank.

Oil and gas companies, which sell their products for hard currency, have weathered the collapse of the national currency better.

Buklemishev draws attention to the fact that the beginning of 2014 was generally good for the economy, and the effect of the sanctions and falling oil prices began to impact Russian business in the second part of the year. As late as June 2014, Brent crude oil cost $114 a barrel, which helped the oil sector show good results.

It is all a matter of revalued hard currency, argues Oleg Vyugin, board chairman of MDM Bank.

“Oil companies are chockablock with hard currency,” he says by way of explaining their brilliant 2014 results.

It is no wonder the most profitable company was Surgutneftegaz. Due in large part to its revalued hard currency savings, it made 885 billion rubles of net profit, 43% of all profits among the RBC 500.

Crisis More Noticeable
Falling corporate profits among the RBC 500 companies reveal the crisis more vividly than official data. Profits fell by nearly half (45%) from 2013 to 2014: from 3.7 trillion rubles to 2 trillion rubles. However, according to Rosstat’s data, in 2014, profits of Russian companies fell by a mere 10%, from 6.5 to 5.9 trillion rubles. Moreover, according to official statistics, 72% of companies were profitable, while 28% made a loss. Among the RBC companies, the split was slightly different: 81% were profitable, while 19% were loss making.

Movchan argues the difference in the numbers may be due to several factors. There is a “sector bias” in the rating of the largest companies. By the end of 2014, the crisis had not yet reached several sectors, for example, the service sector, which is not represented in the rating due to the absence of large companies there. Buklemishev says the more noticeable drop in profits among RBC 500 companies speaks to the fact that business has been going through difficult times.

“Profit is still a controllable variable, and in a bad situation corporations might try and show less profit in order to pay fewer taxes,” he argues.

But a revenue growth of 14%—the RBC 500 companies earned 56 trillion rubles in 2014—is merely the outcome of high inflation.

“It is practically zero in terms of tangible results,” says Movchan.

Oleg Vyugin agrees with him. According to Rosstat, inflation in 2014 was 11.4% and GDP grew by 0.6%.

“The RBC 500 data, which show a slight real growth in revenue and a fall in profits, correspond broadly to the situation in the economy,” he argues.

Small Improvements
There are a few other things worth remarking on in the RCB 500 rating. In terms of revenue (or rather its equivalent, operating income), the financial sector came in second place after oil and gas. Banks and financial companies earned 6 trillion rubles in 2014, outpacing metals and mining. It would seem that a good result for the financial sector testifies to the diversification of the oil economy.

Movchan and Buklemishev note, though, that the financial system is a function of cash flows from the oil industry, just like, however, transport and retail trade. According to Buklemishev, in 2015, the performance of banks will not be so impressive, and the sector itself will make a loss. (In 2014, the banks and financial companies in the RBC 500 showed a profit of 13.1 billion rubles.)

Another trend economists are watching is the strong growth and high net profit margins (the ratio of net income to revenue) in the Internet and online retail sector (e.g., Yandex, Yulmart, Mail.Ru Group, and Wildberries). Here, net profit is more than 50% of revenue. The telecommunication sector has also performed well in terms of profitability (11%). With a profit margin of 10%, the oil and gas industry is only in third place.

The growth of e-commerce is, apparently, one of the few trends showing that a market economy can develop normally in Russia. Oleg Kuzmin, chief economist at Renaissance Capital, argues that growth in this sector is quite understandable: cash flows from the ordinary goods and services sector are being redirected to the Internet. Another reason is that the public has been attempting to reduce its expenditures by buying cheaper goods on the web. It is no wonder that economists have pointed out the low profit margin in the retail segment—3.5% in 2014.

It is interesting to see what yields more profit to foreign companies operating in Russia. Last year, they received 7.2 trillion rubles in revenue here and earned 211 billion rubles in profit. Despite the low margins, most of their profits came from retail trade (17%), the production and sale of alcohol and tobacco (17%), and finance (10.8%). How is that not a diversified economy within Russia’s oil economy?

Translated by the Russian Reader

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Russia rejects criticism of greenhouse gas plan, will not amend – top Putin adviser
Andrey Kuzmin
September 23, 2015
Reuters

MOSCOW, Sept 23 (Reuters) – Russia has rebuffed calls for a more ambitious plan to cut its carbon dioxide emissions after environmentalists branded its current pledge inadequate and backward looking.

The world’s fourth largest emitter of greenhouse gases, Russia pledged in March to keep its emissions at 25–30 percent below the level it generated in 1990, the year before the Soviet Union and its vast industrial complex collapsed.

Green groups say the pledge, made ahead of a global warming summit in Paris in December, is far too easy for Moscow to fulfill because 1990 was a time when Soviet industry was a notoriously prolific polluter whereas Russia’s industrial base today is much smaller.

A group of four global climate research groups, known collectively as Climate Action Tracker, have rated Russia’s pledge as ‘inadequate’, worse than the ‘medium’ assessment they have handed out to other big polluters such as China, the United States and the European Union.

But President Vladimir Putin’s top adviser on global warming dismissed such criticism during an interview on the sidelines of a Moscow meeting of the United Nations’ International Panel on Climate Change this week.

“It is their opinion, it does not reflect anything and is not objective,” Alexander Bedritsky told Reuters, saying Russia would stick to its current plan.

“They can say whatever they want, but our commitments are based on around 70 scenarios of how the climate system will be developing.”

It is unfair to compare the Kremlin’s commitments to those of developed economies such as the United States or European Union member states because Russia is still an economy in transition, he added.

Russia’s pledge stresses the importance of increasing energy efficiency and boosting the use of renewables.

“If the contribution of Russian forests is fully taken into account, limiting greenhouse gas emissions to 70-75 percent of 1990 levels by 2030 does not create any obstacles for social and economic development,” it says.

“TRAGIC PLEDGE”
With its gigantic reserves of oil, gas and coal, Russia emits 2 gigatonnes of CO2 equivalent a year, making it the fourth largest producer of greenhouse gases after the United States, China and India.

According to Greenpeace, 85 percent of CO2 equivalent emissions in Russia come from its energy industry.

They and other green groups say Russia’s current programme is far too unambitious because the Soviet Union was on the brink of collapse in 1990—the year the programme is pegged to—and its greenhouse gas emissions therefore fell sharply as the country’s industrial base shrank.

“This pledge is a tragedy, a catastrophe,” said Vladimir Chuprov, head of Greenpeace’s energy programme.

“With this 25–30 percent commitment they are basically saying: ‘Guys, we’re staying in the 20th century with our carbon-centered technology’.”

Chuprov and fellow environmentalists want Russia, the world’s biggest country by territory, to do much more, noting that its richest company—state-owned Gazprom—is the world’s leading corporate emitter of greenhouse gases.

ANDREI-MOLODKIN-artfair-superJumbo
Andrei Molodkin, Gazprom, 2012. Image courtesy of Orel Art, via Art Paris Art Fair

Specifically, Chuprov says Russia needs to expand its use of renewable energy and try to develop new power generating technologies or risk missing out on another technological revolution.

Currently, Russia gets 90 percent of its energy from carbon fuels such as oil, gas and coal, Chuprov said. Green groups estimate that only around 1 percent of the country’s energy needs comes from renewable sources.

Green groups such as Greenpeace or the World Wildlife Fund complain that central government in Russia does not consult them enough when it comes to formulating climate change policies.

Under its existing plan, Russia would fail to meet the goal set out by the United Nations’ International Panel on Climate Change to cut emissions to 50–80 percent below 1990 levels by 2050, he said.

Bedritsky said Russia was already making good progress and that its greenhouse gas emissions would peak at 25 percent below 1990 levels by 2020. They will then fall or stay flat until 2030, he added.

“Our preparations for the (Paris) summit are not just good, we have achieved excellent results, announced our commitments on time up until the year 2020, and until 2025 and 2030,” said Bedritsky. “We will definitely fulfill our promise.”

(Editing by Andrew Osborn and Gareth Jones)