Page 117 - RusRPTOct21

a national CO2 tax system. According to the newspaper’s sources, the work is to last for 12-18 months, and is to be launched ahead of the EU CBAM taking effect in 2026. The aim, per Vedomosti, is for it to be comfortable forusiness and accepted by the EU. It is yet unknown whether the mechanism for releasing a Russian carbon tax would be a payment at a pre-set rate for emissions in excess of a pre-defined level or quotas trading, or a combination of both.
Also, on the same day, First Deputy Prime Minister Andreyelousov noted the need to take into account the carbon agenda when building the tax system, including perhaps raising payments from industries that are large emitters of greenhouse gases. Prime Minister Mikhail Mishustin, in turn, noted that discussion on setting up a taxation system with large businesses not only solves fiscal problems,but it is also the first step toward the introduction of a carbon tax.
As per our reports, utilities are the most negatively exposed to such developments (as in other countries). We estimate that up to 30% of gencos’ EBITDAs might be at risk if the target envisions a 30% emission cut. M&M are in second place, and O&G are the third most exposed sector. However, we expect relatively gentle targets for emission reductions at the initial stage.
CO2 pricing could be launched in Russia up to 2026, with the following steps required.
2022 – the start of emission reporting for companies with emissions above 150kt CO2e per year (as per the Law on Emissions)
2024 – the start of emission reporting for companies with emissions above 50kt CO2e per year (as per the Law on Emissions)
2024 – Targets set and approval of the law on a trading system 2025 – Pilot regime
2026 – Full-scale operation
Along the way, Russia would be implementing the CO2 trading experiment in Sakhalin (from 2022), with the region due to achieve carbon neutrality by 2025.
On 21 September, ATS Energo released the final results for the renewables DPM auction. According to the release, for 2025-27, 1,851MW of wind capacity was selected. 775MW of solar capacity was selected for 2023-24, and 96MW of small HPPs for 2027-28. The selection was for the first time conducted on the basis of LCOE, which implied:
· RUB1,717-5,100/MWh range for wind vs. RUB2,739/MWh as the weighted average and RUB5,675-6,257/MWh cap;
· RUB4,327-6,405/MWh range for solar vs. RUB5,454/MWh as the weighted average and RUB10,535-10,950/MWh cap,
117 RUSSIA Country Report October 2021 www.intellinews.com