Back to the Future? Russia’s Climate Policy Evolution

In early 1970s, the Soviet climatologist Mikhail Budyko presented a new theory of global warming. He posited that any changes in carbon dioxide levels caused by natural geological processes had been overtaken by human activity, and that a substantial rise in air temperature would take place within 100 years, melting away the Arctic Ocean’s ice cover as early as 2050.

At first, the idea that the climate was so sensitive to human activities provoked ridicule from the international scientific community. But fortunately, Budyko’s work gradually garnered the attention of scientists and politicians alike, prompting massive new studies of climate processes in the United States, Europe, Soviet Union, and others in the mid-1970s. By the late 1980s, there was broad consensus among climatologists about human contributions to ongoing global warming, leading to the adoption of the UN Framework Convention of Climate Change in 1992. In this respect, the Soviet Union was a leading climate voice.

But almost 50 years later, the exact opposite is true: Russia is glaringly absent from international climate leadership. While Russia has signed all UN climate treaties, including the UN Framework Convention on Climate Change and the Paris Agreement’s commitment to prevent “dangerous interference with the climatic system” and reach net-zero carbon emissions by 2050 or soon after, and has been actively engaged in international climate negotiations under the United Nations, G8 and G20, and BRICS bloc for over two decades, Russia has not pioneered advances in our understanding of climate science and has one of the worst climate change mitigation efforts in the world. This is due in great part to poor leadership from national decisionmakers flanked by energy lobbyists and loyal scientists who have sought to downplay the climate threat, arguing that the international community cannot control climatic processes, mitigation is unaffordable, and Russia’s forests absorb most of its carbon emissions anyway.

Russia’s March 2020 “Energy Strategy – 2035” may well signal an extended commitment to this inaction as it envisions a substantial increase of Russian fossil fuel production, combustion, and exports within next 15 years. Sectoral targets also correspond to this strategy: the power plant development plan, oil and gas strategies, and coal and nuclear power programs are all designed to enhance the growth of production and combustion. And while Presidential Decree 666 of November 4, 2020, “On GHG emission reduction,” has set a new aim of lowering emissions 30 percent compared to 1990 levels by 2030, this means that Russia’s carbon emissions can actually rise by 40 percent and still remain below the target threshold. Renewables continue to play a miniscule role in Russia’s energy future and are forecast to remain below 1-2.5 percent of Russia’s energy mix by 2035.

New legal initiatives related to carbon emission regulation have been controlled and carefully watered down by the fossil fuel lobby. A draft 2050 strategy for low-carbon development produced by the Ministry of Economic Development was substantially weakened, and now envisions a rise (not decline) in carbon emission targets by 28-52 percent in 2030 and by up to 80 percent in 2050, relative to current levels. A draft carbon regulation law was stripped of all “regulatory” content and became a voluntary emissions reporting act. The voices of presidential climate adviser Ruslan Edelgeriev, green business proponents, nongovernmental organizations, and experts have been largely ignored. 

But although Russia remains resistant to internal policy changes related to climate change, the winds of change are coming from a westerly direction: the EU Green Deal and its border adjustment carbon tax—to be imposed on the imports of fossil fuels, metals, chemical fertilizers, and other products with a high carbon footprint. (In monetary terms, the European Union accounted for 45 percent of Russian exports in 2020, comprising mostly petroleum, gas, coal, metals, and fertilizers). At present, the carbon footprint of Russian exports to the European Union is well above 1 billion tons of carbon dioxide per year. If the border adjustment tax rate is designed to correspond to the current price of EU carbon allowances (41 euros per ton of CO2), Russian exporters would stand to lose $45 billion per year, or over 10 percent of total national export revenues. These losses will only grow if the carbon tax rises to $50-100 per ton by 2030, as proposed by the High-Level Commission on Carbon Prices co-chaired by Nobel laureate Joseph Stiglitz and Lord Nicholas Stern.

External change is also coming from the East: Japan and South Korea have announced targets of climate-neutrality by 2050, and China adopted a zero-carbon by 2060 goal. The share of these Asian partners in total Russian export revenues is about 20 percent, and the carbon footprint is over 350 million tons of carbon dioxide per year. Although Japan, China, and South Korea have not imposed carbon import taxes, these countries already have mechanisms for carbon pricing and will almost surely adopt some measures of carbon protectionism for their domestic industries.

North America may also worry Russia: a draft law on a net-zero emission by 2050 goal is being considered in Canada’s House of Commons, and the Biden administration’s Plan for a Clean Energy Revolution contains substantial decarbonization targets by 2050 and a $5 trillion green investment plan through 2030. Worldwide, over 120 countries are adopting or considering climate neutrality strategies.

These trends raise hard questions for Russia. What are its energy alternatives in such a dramatically changing environment? If global demand for coal is shrinking, could gas substitute for coal, extending state giant Gazprom’s business in Europe and Asia? The latest modeling results suggest that the role of natural gas as a bridge into a new energy future will be short-lived. In the most ambitious scenarios developed under several EU-funded scientific projects, demand for gas may decline in the European Union by 22 percent, in China by 12 percent, and in Japan by 28 percent by 2030. The competition for global gas supply will be extremely strong from Qatar and other low-cost producers, which would likely affect Gazprom’s positions in the European market. Gazprom’s pipeline delivery costs are relatively higher, and as others have argued, Gazprom no longer plays the role of a swing producer and is obliged to align its prices with those set elsewhere on free markets.

Yet the picture need not be all doom and gloom. Russia has immense potential as a provider of alternative energy resources. How can Russia find a new place in a decarbonizing world? There are plentiful options—but each demands a sense of national urgency and significant state investment.

Renewable energy technologies. As a function of its land mass, Russia possesses the largest store of solar, wind, geothermal, and biofuels in the world. By some estimates, the total “technologically available” potential of Russia’s renewal energy sources (RES) is 25 times higher than all primary energy produced in the country annually. The costs of green power generation have declined dramatically in recent decades, with the world-levelized costs of solar photovoltaic-based power generation down 90 percent and wind down 70 percent from 2009. Solar and wind energy are quickly becoming cheaper than coal and gas worldwide. However, Russia’s RES remains well below 1 percent in the national energy mix. Policy efforts to raise this share up to 2.5 percent by 2020 failed due to a lack political will; insufficient incentives for “green” energy investors; extremely limited state support; excessive regulatory burdens (e.g., a separate road must be constructed for turbine installation); hidden corruption; and subsidies in favor of fossil fuel suppliers. Discreet projects in the solar and wind energy sectors have found success due to the government’s procurement of installed generating capacity, helping to raise the total capacity of RES by 1.1 gigawatts (GW) from 2014 to 2019. By 2024, the government plans to increase RES capacity to 5.9 GW (58 percent wind, 38 percent of solar, and 4 percent small hydro)—potentially creating over 12,000 new jobs in the country—but at present it lacks greater ambition. Significant barriers to RES expansion in Russia remain, including pressure from fossil fuel lobbyists; highly technical requirements for RES installation, which can increase generation costs in a country strapped for money; and state demands that strategic energy equipment be produced in Russia.

“Green” hydrogen, based on zero-carbon electrolysis, offers another RES option. Rapidly growing demand for such green hydrogen in EU countries, Asia, and North America is attracting the interest of large energy companies, including state giants like Gazprom. Germany is reportedly in discussions with Russia over developing green hydrogen—potentially to transport via Nord Stream 2. Russia has the technological and scientific foundations for boosting hydrogen production, and the existing gas pipeline network to transport it to export markets. The challenge is to make this hydrogen based on RES (“green”), not on fossil fuels (“turquoise” or “blue”). Joint projects with European and Asian partners could potentially enhance green hydrogen supply from Russia to Europe, Japan, South Korea, and other markets—indeed, carbon pricing would substantially improve attractiveness and commercial feasibility of such projects—but to date Russia has mostly ignored the carbon markets and regulatory mechanisms.

Second generation biofuels derived from organic matter are also in high demand in global markets. Russia possesses a huge amount of biomass, including wood waste, low-grade wood, and agricultural residues. The technologies to convert these into energy are known and available. For example, the production of energy bio-charcoal could substitute for traditional coal in power plants with less pollution and no carbon footprint. Using Russian innovations in cheap catalyzers to expand the production of bio-kerosene, which is extremely important for reducing carbon emissions in aviation, and bio-gasoline for automobiles, corresponding to Euro 5 standards for vehicle emissions but with zero-carbon emission, could likewise produce viable alternatives to natural gas. However, the absence of policy support and financial incentives to develop these options as well as strong competition from the fossil fuel sector are significant barriers.

Russia is often cast as a country that “punches above its weight” globally—possessing a diminishing economy but an abundance of political will to secure its policy objectives. And yet when it comes to energy transition, the reverse is true. Despite its natural advantages, technological prowess and innovative workforce, Russia lacks the political will to grow into a renewable energy superpower of the future.

Georgy Safonov is a visiting fellow with the Europe, Russia, and Eurasia Program at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Georgy Safonov

Visiting Fellow, Europe, Russia, and Eurasia Program