Page 101 - RusRPTJan22

strategy to 2030).
Russia approves regulation for new stations built in the Far East.
Kommersant reported. The regulation was approved on 24 November. Though approval was widely expected, the story is quite material for RusHydro (HYDR) and definitely a positive one. Regulation allows 12.5% returns on new investments in the Far East. Simply put, the new stations in the Far East will receive a rate of return on investments (12.5%) upon completion through increased capacity payments. To a certain extent, this is a turn-around story for RusHydro, as historically all investments into the Far East were value destructive and tariffs did not fully cover meaningful return on investments to HYDR. Unfortunately it is not without a spill-over for consumers – effectively we are going to fund this through increased tariffs for electricity.
World Bank forecasts minimum CO2 price of $44 per tonne for Russia to reach carbon neutrality.
The World Bank published a report on Russia’s green transition on December 1 that concluded in order to reach carbon neutrality by 2060, Russia needs to introduce carbon prices from $44/t CO2 in 2025 to $130/t CO2 in 2050.
The International Monetary Fund (IMF) previous proposed that $50 per tonne for Russia and other developing countries as an acceptable price. The Kremlin is currently preparing a $6.5 trillion decarbonisation plan that will be launched next year to make Russia carbon neutral by 2060. The Russian Ministry of Economics has pencilled in a cost of $30 per tonne for carbon in this plan.
However, the World Bank estimates with a price of $44 per tonne overall GHG emissions could be reduced 14% from their current levels in Russia.
“It advised the introduction of carbon prices for the energy sector, transport and industrial production. If carbon pricing is set for carbon emissions in these sectors, it would cover 79% of all emissions in Russia. The World Bank notes the possibility of a carbon price in the form of a carbon tax, a system of paid permissions, carbon quotas trading or fuel taxes, depending on the volume of emissions,” VTB Capital (VTBC) said in a note.
“We estimate that at $30/t, Russia would be able to cut its emissions by half. The cheapest options include waste management, cutting methane emissions in the O&G and coal mining sectors, the decarbonisation of power generation via renewables, as well as forestry projects. For more details, see our ESG & Decarbonisation –
101 RUSSIA Country Report January 2022 www.intellinews.com