Global Climatic Threat and Russian Economy: Searching for the Way. report of SKOLKOVO Energy Centre
The global climate threat is even more topical for Russia, rather than for many other countries. The climate warming in the Russian territory has been 2.5 faster than the global average, and in the Russian Arctic, 4.5 times faster, in the last 40 years. The climate change in Russia has already threatened human health and life, forced people to migrate, brought risks to food safety and infrastructure. However, the climate change problem is not among public policy priorities at both federal and regional levels in Russia, while corporate interest in the carbon footprint reduction is gradually increasing, promoted primarily by European shareholders and investors.
At present, the country’s climate regulation is in its infancy. The best-case scenario of the draft Russian low-carbon development strategy envisages the 2050 objective to reduce greenhouse gas emissions by 52% on 1990, which is not ambitious compared to flagship countries pursuing climate neutrality (zero net emissions of all greenhouse gases) goals. Moreover, the baseline scenario does not even provide for the roll-out of a carbon dioxide emissions trading system. Meanwhile, Russia has got potential to cut down greenhouse gas emissions
to carbon neutrality and even lower, for example, by enhancing energy efficiency, unlocking renewables potential, and improving greenhouse gases absorption on managed lands.
Notwithstanding Russia’s goals and performance of Russia’s obligations to reduce emissions in its territory, the climate agenda poses a long-term threat to Russians exports of key items, such
as oil, refined products, coal, natural gas, metals, wood and chemical industry products. In the absence of special response efforts, this may entail long-term limitations on the Russian economic growth. Russia’s response to the climate threat may depend on the global pace of combating the climate change and on attitudes of the Russian society and the state to this challenge. The main choice seems to be between two extreme scenarios, the Continued Current Policy and the Global Climate Unity.
Both scenarios imply some risks. Continuation of the current policy amplifies the negative impact of climate change. In the long run, this may bring about hardly predictable consequences (for which Russia has no reliable and comprehensive assessment). Limited GDP growth caused by declining demand for Russian export items, such as oil, refined products, coal, natural gas, metals, wood and chemical industry products, threatens the national economy. When overlapped, these concurrent risks put a cap on opportunities to adapt to costly climate changes and
to recover from natural disasters.
Under the Global Climate Unity scenario, climate change is mitigated by active international measures to mitigate greenhouse gas emissions. In Russia, risks arise from potential loss of current sales markets and reduction in the backbone economic sectors’ revenues and tax revenues for the budget. Heat and electricity prices and tariffs are to go up inevitably. On the other hand, an accelerated transition to the low-carbon economic model would diversify the economy and create incentives for innovative developments.
The Continued Current Policy risks prove to be substantially higher and, ultimately, destroy the country’s economy. Therefore, for Russia, the second scenario path is deemed to be a more reasonable response to the climatic threat, rather than discussions as to the climate change reasons.