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starting March 2023. The document on this has been presented to the government. Additionally, the Ministry for Economic Development plans to spend RUB 11bn on the federal project on low carbon policy. This is to include the development of a national climate regulation system, a monitoring system for GHG absorption and scientific studies.
Gazprom has expressed willingness to cooperate with Kayrros on measuring its methane emissions. Kayrros tracks methane emissions and is known for identifying and reporting methane leaks at Gazprom’s transport objects. Earlier, Novatek signed an agreement with Kayrros to improve the monitoring of methane emissions at its assets.
The Ministry of Finance of Russia was considering carbon unit trading and a quota system as a priority option to offer stimulation for the energy transition and for distributing money from "brown" projects to "green" ones Interfax reported on 6 December. The Ministry plans to look at projects that require additional regulation on a case by case basis, noted Ivan Chebeskov, director of the financial policy department of the Ministry of Finance. Such a system would allow Russia to attain its target of carbon neutrality by 2060. A few years would be needed to set up the system of trading as per the examples of the EU and China. Putting a price on carbon is becoming the part of the communications of all the relevant ministries in Russia. While the law on emissions mandates reporting for large emitters at this stage, MinEconomy noted in its low-carbon strategy the possibility of a carbon price, with the Sakhalin experiment rules to be expanded to other regions. It appears to us that the discussion is getting up to speed, and we now expect full-scale operation of the mechanism by 2026. Gencos would be the most affected by a carbon price in Russia, vs. a much miler effect on M&M and O&G companies
Russia’s System Operator’s data shows that Russian power demand increased 5% y/y in November 2021, while power production was up 6.3%, with the difference exported, BCS GM reported on December 2.
Russian power consumption and production are both up y/y, by 5% and 6.3%, respectively. However, much more important – spot power prices remain strong, outpacing cost increases.
“That bodes well for spot power pricing and is supportive for Russian gencos,” BCS GM said in a note. “The recovery in demand bodes well for spot power pricing (now around Rb1400/MWh for European Russia), which remain at elevated levels – up 15-20% y/y (materially above last year’s levels) and above pre-pandemic levels as well (up 30%).”
“This is already a fundamental value-accretive story for all the gencos (HYDR, IRAO, UPRO, etc.), substantially benefiting the P&L of all generation companies, as costs (local gas prices, labor, etc) have only risen marginally y/y. Hence, most of the increase goes directly into bottom line. The strong
99 RUSSIA Country Report January 2022 www.intellinews.com