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GDP is similar to what the Ministry for Economic Development noted previously as one of possibilities in a particular scenario. On our estimates, Russia can remove 25% of its emissions for a price tag of RUB 43tn (the equivalent of 1.3% of GDP per annum), and 50% for RUB 86.6tn (2.7% of GDP per annum). Our research also indicates that Russia can halve its emissions using a carbon price of only USD 30/t, first undertaking the cheapest decarbonisation options. These include tackling waste disposal, reducing O&G and coal mining methane emissions, decarbonising the power sector via renewables and undertaking forestry projects.
Carbon trading. The government commission has approved the legislation related to the carbon trading experiment in select regions. The pilot project is to be held in Sakhalin and is aiming for carbon neutrality by 2025 (in 2021, 12.3mnt CO2e was emitted while 11.1mnt CO2e was absorbed). This is to be achieved through carbon trading, moving 145 boilers from coal to gas (Gazprom expects gasification in Russia to allow it to reduce CO2 emissions by 23mnt by the end of 2024), increasing the share of transport operating on gas and electricity to 50%, raising the share of renewables and starting hydrogen production in the region. The Bashkortostan, Khabarovsk, Irkutsk and Kaliningrad regions are looking to join the experiment. The carbon trading experiment in Sakhalin is an important step in the development of the national carbon trading system, while its potential expansion to four more regions is even more promising.
HPP and GAES construction. President Vladimir Putin mandated the government to prepare the plan for constructing HPP in Russia (so as to maintain the low-carbon energy balance), to assess building 5GW of hydro-accumulating capacity and to define the locations. The plan is to be presented by 1 July 2022. Putin also ordered that it assess grid construction in order to be able to unify OES Vostoka and Siberia. Developing HPP and GAES generation is important for the Russian generation outlook, which is planned to be dominated by low carbon and carbon-free generation by 2050, with coal accounting for only 4% in the mix. RusHydro is working on an assessment of anti-flood HPPs, and also noted its Krapivinskaya HPP assessment, but the projects have to be granted a guaranteed return to create value for the company.
Energy strategy. Putin requested that the government commission update Russia’s Energy Strategy to account for decarbonisation through 2050 (vs. 2035 currently), including steps to increase low-carbon and non-carbon generation. This has to be completed by 15 April 2022, and must be accompanied by an updated Energy Efficiency Programme to align it with the low-carbon strategy. The energy strategy update would make it possible to align the national energy outlook with the more ambitious targets in the low-carbon strategy.
CCS. The President ordered the government to assess the legislation for
97 RUSSIA Country Report February 2022 www.intellinews.com