Current Policy Projections
Current policies overview
Contrary to the required peak and decline of emissions needed to achieve the Paris Agreement goal, emissions in the Russian Federation are expected to either flatline or continue growing from 2021, after the expected economic recovery-induced increase, until at least 2030.
However, Russia’s emissions targets, which use 1990 as a reference, allow national emissions to continue an upward trend without missing its international commitments. According to our latest estimates, currently implemented policies will lead to emissions of between 2.0 and 2.2 GtCO2e in 2030 (excluding LULUCF), which is just 3-9% below 2018 emission levels. This represents a 32-37% decrease in emissions below 1990 levels, a level that is below the NDC targets which amount to a 19-24% decrease below 1990 levels (excluding LULUCF).
In March 2020, Russia released its draft long-term climate strategy, which contained emissions projections to 2050 (Russian Federation, 2020a). Both the “baseline” and more ambitious “intensive” emission projection scenarios fail to realise a reduction in emissions below 2017 levels by 2050, representing a severe lack of intent from the Russian government. According to the IPCC Special Report on 1.5°C, the world must achieve net-zero CO2 emissions by 2050 to limit warming to the 1.5°C long-term temperature goal of the Paris Agreement (IPCC, 2018). This demonstrates the extent to which Russia’s projected emissions trajectories fail to live up to the level of ambition required, particularly from major emitters such as Russia.
Contained within Russia’s draft long-term strategy are a list of policy actions required to achieve its stated priority of aligning Russia with the Paris Agreement (Russian Federation, 2020a). At present, there is little to no action being undertaken on any of these stated policy requirements. If Russia is to align itself with the goals of the Paris Agreement as it has stated it intends to, significant action in these areas and others will be required.
Following his re-election for a fourth term, in May 2018 President Putin pushed for the country achieving a technological, environmental and economic breakthrough. The Environment Ministry then drafted the “Ecology” (Экология) programme focusing on air pollution reduction, reforestation, and improving waste management (Ministry of Environment and Natural Resources, 2018). None of the ten directions in the Ecology programme relate directly to GHG emissions reductions, although the “clean air”, “waste management” and “preservation of forest” could have important synergies with climate change mitigation. The budget that had been initially planned for the Plan was subsequently cut by 17%.
There has been little progress in climate action implementation in the Russian Federation. Yet, in late 2018, the Ministry of Economic Development proposed new draft legislation “On state regulation of emissions and the absorption of greenhouse gases” with a view to making Russian companies more competitive on emissions reductions and inspiring innovation in low-carbon industries (Ministry of Economic Development, 2019).
The legislation introduced in December 2018 was initially intended to establish a cap-and-trade system for major carbon emitters by 2025 and require companies to report their emissions. It would have allowed the government to introduce targets for GHG emissions and charge companies for excess emissions, which would feed into the Emissions Reduction Support Fund. However, due to fierce resistance from the Russian Union of Industrialists and Entrepreneurs, all of these measures except for the requirement of companies to report their emissions have been removed (Moscow Times, 2019b).
Two recent studies have shown the potential impact on Russia’s economy under a scenario of concerted global climate action. Kahn et al. (2019) estimate that Russian per capita GDP could be up to 0.6% lower by 2050, while Makarov, Chen, and Paltsev (2020) project that such concerted action from the main importers of Russia’s fossil fuels will reduce Russia’s GDP growth rate by one half of a percentage point. Makarov, Chen, and Paltsev not only found that the Paris Agreement is expected to raise the risks of Russia facing market barriers to exporting its energy-intensive goods, but that redistribution of income from the energy sector would benefit the economy.
Russia’s continued reliance on emissions-intensive forms of energy not only poses a challenge for the Russian economy in the future, it is also expected to exacerbate the impacts it faces from the changing climate. The 900-page report “On the status and protection Environment Russian Federation” produced by the Ministry of Natural Resources and Ecology breaks down the past and future consequences of climate change for the country (Ministry of Natural Resources and Ecology of the Russian Federation, 2017). It concludes that Russia is already being hit by the natural disasters and other impacts of climate change, and projects this trend to increase in the future (e.g. heatwaves, widespread forest fires, epidemics, drought, mass flooding, and food shortages). This was underscored by Russia’s climate adaptation plan for the period to 2022, which was released in January 2020. In addition to the aforementioned impacts, it projects an increased risk to public health, degradation of permafrost in the northern regions with damage to buildings and communications, disruption of the ecological balance, including the displacement of some species by others, and the spread of infectious diseases and parasites (Russian Federation, 2019a).
Russia’s energy sector accounted for 79% of all emissions without LULUCF in 2018 (the last year for which data is available). This is expected to fall to between 71% and 65% by 2030 as the share of renewable energy gradually increases and coal consumption begins to be displaced by natural gas (IEA, 2019).
Installed renewable power generation capacity sat at approximately 54 GW by the end of 2018, equivalent to 20% of the country’s total power generation capacity, with hydropower representing the majority by far of the installed renewable energy capacity (52 GW).
A recent positive development is Russia’s decision in late 2019 to extend the support programme for renewable energy beyond 2024, with 400 billion roubles (5.6 billion USD) allocated to construct 5.3 GW of renewable energy capacity between 2025 and 2035 (Lyrchikova, 2019). This is roughly double the 2024 renewable energy capacity target under the previous scheme of 5.6 GW. The funding split under the new programme is to be 60% towards wind energy projects, and 40% towards solar PV projects, resulting in 3 GW and 2.2 GW of new wind and solar PV capacity respectively.
Under current policy projections, there is a slight upward trend in the share of renewable sources in primary energy demand, from around 3.3% in 2017 to 4.5% by 2030. Russia has a 2.5% Renewable Energy Target for 2020 and a 4.5% target for 2024 (excluding large hydro) for the electricity sector, which we estimate would increase the share of RE sources slightly to 4.5% of primary energy demand by 2030. However, in 2019, just 0.16% of Russia’s electricity came from non-hydro renewables compared to the global average of over 10%, indicating it is very unlikely Russia will meet even its modest short-term renewable energy targets (BP, 2020). The lack of projected progress on increasing uptake of renewable energy in Russia is shown below. This includes generation from large hydro.
Share of renewable electricity generation
In June 2020, Russia adopted its long-delayed Energy Strategy 2035, which confirms Russia’s intention to heavily support its fossil fuel energy sectors beyond the next decade. The strategy suggests that Russia will continue to sell oil, coal, and gas to the rest of the world, while everything that hinders this goal is considered to be a threat and a challenge (Zhelenin, 2020).
Indeed the strategy assumes that “until 2035 fossil fuels will continue to form the basis of the global energy sector with a gradual increase in the share of energy based on the use of renewable sources” (Russian Federation, 2020b). These assumptions underpin both scenarios outlined in the document, and accordingly, there is little focus on renewable energy technologies, and no long-term targeted increase in generation from this sector. Instead the strategy advocates for the development of clean-coal technology and for minimising the flaring of natural gas as key measures to address climate change in the energy sector.
Despite this stated goal of minimising flaring, and the introduction in 2012 of a 5% limit on flaring of gas as a proportion of total production, the figure in 2016 remained close to 11% (Korppoo, 2018). In 2019, Russia saw its second consecutive year of increasing flaring volumes, maintaining its position as the world’s largest flaring nation (Global Gas Flaring Reduction Partnership, 2020). At 23.21 billion cubic metres, Russia flared almost 30% more gas in 2019 than the next highest country, Iraq.
Natural gas made up 54% of Russia’s total primary energy demand (TPED) in 2018, and this is projected to increase slightly to 55% by 2030 under current policies, mostly at the expense of coal. This high share of gas is problematic, as gas does not have a place in 1.5°C compatible scenarios and still produces significant GHG emissions in both its production and consumption (Masson-Delmotte et al., 2018).
The current and projected future high reliance of the Russian economy on the fossil fuel sector is not without risk. Even before the massive decline in global oil demand caused by the COVID-19 related economic slowdown in early 2020, Russia and Saudi Arabia were already fighting an oil price war (S&P Global Platts, 2020). Russia refused to reduce oil output to keep global prices afloat, and in response, Saudi Arabia drastically increased supply, sending oil prices plummeting. This large oil price shock and the numerous others before it demonstrate the potential volatility inherent to Russia’s strategy of relying on fossil fuel export revenues for economic growth and fiscal stability. Even prior to the COVID-19 pandemic, Russian energy exports and budget revenues were projected by one study to decrease by 15% and 17% below 2019 levels respectively by 2040 under its “energy transition” scenario (Mitrova, Khokhlov, Melnikov, & Perdereau, 2020). Conversely, the latest projections from the Russian government show oil, gas and coal exports all increasing to 2030 (Russian Federation, 2019b).
In addition, there are increasing signs of reticence from the banking sector to finance projects seen as contributing to climate change. A number of Western commercial banks have recently announced policies against providing financing for oil and gas projects in the Arctic, while in late 2019, the European Investment Bank announced a total ban on funding fossil fuel projects by the end of 2021 (Associated Press, 2020; Ekblom, 2019). A continuation of this trend will increase the risk that the envisaged expansion of Russia’s fossil fuel exports fails to eventuate, with substantial negative implications for Russia’s public finances.
In a sign that environmental concerns of investors may also be affecting corporate behaviour in Russia, Enel Russia, a large Italian-owned energy retailer, sold off its largest coal power station in 2019 (Moscow Times, 2019a). Enel Russia is a leading investor in renewable energy and has been attempting to divest itself of coal-fired power assets in order to make its portfolio of power plants greener.
Coal share in energy supply in Primary Energy
In contrast, Russian state development bank VEB said in November 2019 that it would provide financing of 34 billion roubles (USD32 million) together with VTB Bank for the construction of a new coal port in the east of Russia (Reuters, 2019). The terminal’s initial capacity is expected to be 12 million tonnes of coal per year, eventually doubling to 24 million tonnes per year. Operations are scheduled to commence at the port in 2020.
Russia’s agricultural sector in 2018 only amounted to 5.7% of total emissions without LULUCF. In the agriculture and forestry sectors, Russia’s approach is primarily based on adaptation instead of mitigation. The government has implemented a series of measures to address the negative effects of extreme weather events and disasters, including drought and fires, and is currently working on expanding the scope of its agricultural climate policies to include the use of new technologies, including new forms of nitrogen fertilisers (Ministry of Environment and Natural Resources, 2017).
Negative emissions from Russia’s forestry sector in 2018 equalled 27% of the country’s total emissions excluding LULUCF. The Federal Forestry Agency developed the State Program of forestry development for 2020 (Rosleskhoz, 2013), which includes optimisation practices for afforestation and an improved methodology for risk calculation to minimise the effects of forest and peat fires.
Despite these policies, according to the most recent projections to 2050, included in the Third Biennial Report, instead of increasing, the current forestry net sink will drop to zero over the next 40 years mostly due to the reduction in the absorbing capacity of aging forests (Ministry of Environment and Natural Resources, 2017). This decline can be halted only by radical changes in forestry practices and by protecting significant amounts of primary forests from commercial clear-cutting (Kokorin & Korppoo, 2017).
In the national project “Ecology” (Экология) 151 billion roubles (2.11 billion USD) has been allocated for the “Preservation of Forests” for the period 2019-2024. The main focus of the policy is on the restoration of deforested land, with an aim to achieve 619 kha of reforestation and afforestation (Ministry of Environment and Natural Resources, 2020). The impact of these plans on emissions is unclear and has not been included in our current policy projections.
The waste sector contributed 4.4% to Russia’s total emissions excluding LULUCF in 2018 (the last year for which data is available). Measures to curb emissions in the waste sector included in our projections are in line with the integrated management strategies for municipal solid waste, adopted through strategic legal documents between 2014 and 2017 (Ministry of Environment and Natural Resources, 2017).
In the national project “Ecology” (Экология) 457 billion RUB (6.4 billion USD) have been allocated for "waste management", of which 296 billion RUB (4.1 billion USD) has been designated for the creation of an integrated waste management system. Other areas include the reclamation of 191 landfills and the creation of infrastructure for hazardous waste management. The impact of these plans on emissions in unclear and has not been included in our current policy projections.