Page 19 - FSUOGM Week 39 2021

FSUOGM POLICY FSUOGM

Russia starts designing domestic

CO2 tax system

RUSSIA THE Russian government has started designing commented on September 24.
the national CO2 tax system, with the drafting to VTBC analysts note that utility companies
Emissions reporting will take 12-18 months, and the new tax is planned are the most negatively exposed to new taxation
begin in 2022. to be launched ahead of the EU CBAM taking developments in Russia, as in other countries.
effect in 2026, Vedomosti daily reported citing They estimate that up to 30% of generating com-
unnamed sources. panies' EBITDAs might be at risk if the target
As followed by bne IntelliNews, the looming envisions a 30% emission cut.
introduction of the EU Carbon Tax in 2022 is a Metals and mining companies are in second
major issue for Russian companies to resolve. In place, and oil and gas are the third most exposed
2020 the Central Bank of Russia (CBR) warned sector. However, VTBC expects "relatively gen-
that the tax could threaten financial stabil- tle targets for emission reductions at the initial
ity, as Russia is the second-largest exporter of stage".
CO2-intensive exports to the EU after China, The analysts at VTBC believe that CO2 pric-
with exporters facing extra costs of $3bn-$4.8bn ing could be launched in Russia up to 2026, with
annually. the following steps required.
However, most recent reports showed that
the new proposals concerning the EU CBAM 2022 – the start of emissions reporting for
offer some relief and time to adjust to Russian companies with emissions above 150,000 tonnes
exporters. The government now reportedly per year of CO2 equivalent per year (as per the
also aims to have its own CO2 tax system Law on Emissions)
accepted by EU, while making local businesses 2024 – the start of emissions reporting for
comfortable. companies with emissions above 50,000 tpy of
"It is yet unknown whether the mecha- CO2e (as per the Law on Emissions)
nism for realising a Russian carbon tax would 2024 – Targets set and approval of the law
be a payment at a pre-set rate for emissions in on a trading system
excess of a pre-defined level or quotas trading, 2025 – Pilot regime
or a combination of both," VTB Capital (VTBC) 2026 – Full-scale operation™

NEWS IN BRIEF

RUSSIA and international aircraft manufacturers," OPEC says global demand
the press release reads, without providing
Gazprom Neft and Aeroflot further details. for oil to stop rising after
"Many international air carriers are
to develop “green” aviation starting to use SAF on a test basis, and plan 2035
to increase their proportional usage of this
fuel fuel over the next 10 to 20 years. We are Global demand for oil will increase
insignificantly after 2025 and stop rising
happy to reaffirm our commitment to the
Russian oil major Gazprom Neft has closed environmental priorities of the aviation after 2035, the OPEC said in its annual
an agreement with national air carrier industry, but it is, at the same time, very World Oil Outlook (WOO) report on
Aeroflot Group on co-operating in the important for the Aeroflot Group that using September 28.
production of Russia’s first ever minimum- SAF makes sense not just environmentally, Global oil demand will increase by 2.6
carbon-footprint sustainable aviation fuel but economically too,” the CEO of Aeroflot million barrels per day annually in 2020–
(SAF), the companies announced in a press Mikhail Poluboyarinov commented in the 2025, by 0.6 million barrels per day annually
release. press release. in 2025–2030, and by only 0.3 million
Gazprom Neft and Aeroflot aim to Previously Aeroflot was one of the first barrels per day in 2030–2035, it said.
develop effective aviation-fuel formulations companies to raise a $320mn ESG-linked In Russia, peak demand for oil will also
fully compliant with international loan from Sovcombank. The loan raised be registered in 2025, then demand will
requirements on limiting greenhouse gas by Aeroflot would have its financing costs remain flat during 15 years, and it will begin
(GHG) emissions and the International linked to the company’s ESG performance, to fall beyond 2040.
Civil Aviation Organisation’s (ICAO) assessed by MSCI ESG rating agency. . Global demand for energy will increase
CORSIA environmental programme. by 27.8% to 352 million barrels of oil
"A working group on developing Russian equivalent in 2045 from 275.4 million
SAF is also expected to include Russian barrels of oil equivalent in 2020, with the

Week 39 29•September•2021 www. NEWSBASE .com P19