Cablegate: Doe Pdas Elkind's Visit to Moscow

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PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK
RUEHYG
DE RUEHMO #2499/01 2741257
ZNR UUUUU ZZH
P 011257Z OCT 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4958
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 MOSCOW 002499

SIPDIS
SENSITIVE

DEPT FOR EUR/RUS, EEB/ESC/IEC GALLOGLY AND GREENSTEIN,
S/EEE MORNINGSTAR
DOE FOR HEGBURG, EKIMOFF
DOC FOR JBROUGHER
NSC FOR MMCFAUL, JELLISON

E.O. 12958: N/A
TAGS: EPET ENRG ECON PREL RS
SUBJECT: DOE PDAS ELKIND'S VISIT TO MOSCOW

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Summary
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1. (SBU) DOE Principal Deputy Assistant Secretary for Policy
and International Affairs, Jonathan Elkind, visited Moscow
September 21-22 to meet with his counterparts at the
Ministries of Foreign Affairs, Energy, Science and Education,
Economic Development and Natural Resources. As Coordinator
for the Energy and Environment Working Group (WG) under the
Bilateral Presidential Commission (BPC), he discussed the
structure of the WG and potential areas of cooperation.
Meetings were also held with the World Wildlife Fund, the
American Chamber of Commerce (AmCham) and the Petroleum
Advisory Forum (PAF).

2. (SBU) The Russian consensus was that Environment needs its
own WG. PDAS Elkind emphasized DOE's desire to be flexible
and pragmatic on the WG structure. He promised to convey the
GOR message to Washington, but cautioned that the decision to
change a WG would be made at a higher level. Elkind told
each of his counterparts that Russia's intellectual capital
and resource endowment puts it on a short list of countries
in a position to lead the development of the energy future
for the planet. End summary.

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Ministry of Foreign Affairs
---------------------------

3. (SBU) Deputy Director for the North American Department,
Nikolay Smirnov, said he expected some overlap among the WGs,
and that it was not a problem. The MFA would leave it up to
the Energy Ministry and Ministry of Natural Resources to work
out their differences. He supported a sub-WG on energy
security (to be chaired on the US side by Ambassador
Morningstar) and emphasized the importance of finding a place
for Arctic issues in the BPC. Smirnov thought the Energy
Ministry would provide a counterpart for Morningstar, but was
not sure. Elkind noted that the U.S. side would be
supportive of a structure that allows the WG to move forward.
He also sought to clarify the role of outside experts in the
WG, stating that their input would be crucial, but an
official seat at the table could cause legal problems.

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Ministry of Energy
------------------

4. (SBU) Deputy Energy Minister Anatoly Yanovsky told Elkind
that it would be best to split energy and environment into
separate working groups. Ministry of Natural Resources
representative Andrey Peshkov, who attended the meeting,
agreed. Yanovsky and Elkind shared the opinion that
DOE-Ministry of Energy cooperation would only include those
environmental issues directly related to energy. Yanovsky
also expressed a desire to see the Energy Security and
Markets sub-group set up, and wanted it to address "legal
regimes for international cooperation."

5. (SBU) PDAS Elkind delivered a letter from Secretary Chu to
Energy Minister Sergei Shmatko, inviting him to meet in the
fourth quarter of 2009, perhaps in Europe on the sidelines of
a multilateral gathering. Yanovsky said the Russian side had
not yet designated a counterpart to Elkind to coordinate WG
activities, but that it would provide that information in the
near future.

6. (SBU) Both sides agreed to finalize the DOE-Energy
Ministry MOU on cooperation in preparation for a Chu-Shmatko
meeting this fall, at which both sides could sign the
document. The MOU was drafted in June by the USG as
follow-up to a meeting between Minister Shmatko and Deputy
Energy Secretary Poneman in Moscow. The document was cleared
by the U.S. interagency and submitted to the Russian side
before the BPC was created at the Summit between President
Obama and President Medvedev. The MOU, it was agreed, would
be revised to reflect the role and structure of the BPC.

---------------------------------

MOSCOW 00002499 002 OF 003

Ministry of Science and Education
---------------------------------

7. (SBU) The Head of the International Department of the
Ministry of Science and Education, Vladislav Nichkov, said
there were abundant existing avenues for cooperation in
addition to the three WGs that FASI was involved in. He
asked that DOE check on the status of three bilateral
agreements on science and technology cooperation up for
review or renewal. Elkind promised to do so.

--------------------------------
Ministry of Economic Development
--------------------------------

8. (SBU) Oleg Pluzhnikov, Deputy Director for Structural
Reforms at the Ministry of Economic Development, told Elkind
that he expected the State Duma to pass a new law on energy
efficiency by the end of the year. In principle, the codes
and standards would mirror EU standards and would, among
other things, provide incentives for consumers to install
power meters and cause a phase-out of incandescent light
bulbs, which would no longer be allowed for sale. The
Ministry of Economic Development has not been involved to
date with the Energy and Environment Working Group, but did
not anticipate problems in working with the Energy Ministry
under the BPC. Pluzhnikov said his Ministry is responsible
within the Russian Federation for energy efficiency
legislation, some climate change issues, and energy saving
mandates. Pluzhnikov noted that Kyoto implementation was not
a priority for the GOR.

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Ministry of Natural Resources
-----------------------------

9. (SBU) After spending 20 minutes reciting the Ministry's
charter and summarizing its work under bilateral agreements
with the US dating back to 1972, Vladimir Ivlev, Head of the
International Cooperation Department of the Ministry of
Natural Resources, said that MNR wanted an independent WG for
environmental issues. He also expressed an interest in more
direct cooperation with DOE. Elkind reiterated DOE
flexibility, but left it to the Russian side to arrange their
WG representation. He agreed to look into new areas of
cooperation for DOE and MNR.

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World Wildlife Fund
-------------------

10. (SBU) WWF Climate Change Program Coordinator Alexey
Kokorin said that policies to reduce gas flaring and increase
energy efficiency will help lower Russia's greenhouse gas
emissions, but the GOR was not motivated by climate change to
pursue these goals. He said that unlike their fellow
ministers, Yury Trutnev (MNR) and Sergey Shoigu (Emergency
Situations) understand the scope of the problem because they
have to deal with the consequences of climate change. The
problem, Kokorin said, is that the danger is not felt in
Moscow, only Kamchatka; "Russia has had no equivalent to
Hurricane Katrina." Kokorin does not believe that Russia
will make a meaningful commitment at the UN Framework
Convention on Climate Change (UNFCCC) Conference of Parties
in Copenhagen in December 2009. Russia's declared emissions
reduction target represents in fact an increase over current
levels, but he cautioned that little fuss should be made over
Russia's lack of ambition here, as the target was based on
unrealistically high annual economic growth projections and
won't, in reality, be reached. What matters is that the GOR
is considering treating the 30 billion tons of carbon it will
have avoided emitting over the 30 years between 1990 and 2020
due to the fall of the USSR and subsequent economic collapse
as a "donation" toward global carbon reduction targets.
Kokorin recommended that USG and EU leaders recognize
Russia's "30-30" commitment as "a big deal" and praise
Russia's leadership. Kokorin hoped Minister Trutnev would
lead the Russian delegation to the UNFCCC negotiations in
Copenhagen, as it would raise the stature, but he thought
this was unlikely. Kokorin noted the impact of more extreme

MOSCOW 00002499 003 OF 003

weather on energy infrastructure, including power
transmission lines, suggesting this as an area for fruitful
bilateral cooperation. He also suggested the USG might seek
ways to support the development of Russia's biomass (wood
pellet) industry, given the volume of timber waste and unused
agricultural land.

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AmCham
------

11. (SBU) Elkind met with two groups convened by the American
Chamber of Commerce. With AmCham's energy committee, he
discussed current obstacles and opportunities in the oil and
gas sector in Russia. With a small group that included
representatives GE, Alcoa, and Chevron, he discussed energy
efficiency business opportunities for American firms. On
efficiency, the businessmen's general message was that joint
ventures with state-owned companies and procuring Russian
content, or setting up local manufacturing were keys to
success. Heavy energy users like Alcoa are not likely to
make major energy efficiency upgrades until there are tax
incentives to support that.

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PAF
---

12. (SBU) PAF Executive Director Vlad Konavalov told Elkind
that the Ministry of Energy is not open to advocacy by his
organization, which represents Western oil and gas sector
firms. Instead, the Energy Ministry is open to lobbying from
Russian energy firms and represents their interests within
the government. However, PAF does have good relations with
MNR, specifically Deputy Minister Donskoy, who heads the
Foreign Investment Advisory Council and oversees policies on
subsoil use. Konavalov said there had been a noticeable
decrease in negative attitudes toward American firms in
recent months. Konovalov noted that Western direct and
indirect investment, including portfolio and minority equity
stakes, amounts to approximately 20 to 25 percent of the
Russian oil and gas sector -- a far higher number than widely
thought.

13. (U) PDAS Elkind has cleared this cable.
Rubin

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