Page 29 - bne magazine November 2021_20211104 uzbekistan risding

bne November 2021 Companies & Markets I 29
Russia’s forests offset its CO2 emissions and absorb approximately 635 mtCO2/yr. Russia accounts for 70% of the world’s boreal forests and 25% of the world's entire forest resources. The area of Russian forests has increased by 4.3mn hectares over the past 10 years – equivalent to the size of Denmark – after falling for years due to two decades of illegal and unregulated logging operations.
Deputy Minister of Energy Evgeny Grabchak said that the Ministry of Energy forecasts that under Russia’s increasingly serious green deal the updated energy strategy predicts that electricity demand will grow 24% by 2035 compared to 2020, and 43% by 2050.
In 2035 the electricity generation split is expected to be 19.8% hydropower, 23% nuclear power, 4.5% renewables and 40% gas (with a 9.5% contribution from coal), according to Grabchak. By 2050, this is to be 19% for HPP, 24% for NPP, 12.5% for renewables, 43% for gas and 4.5% for coal.
“The generation split expectations provided by MinEnergo are similar to those that the Ministry for Economic Development has in its target (intensive) scenario in the latest low-carbon strategy draft,” VTB Capital (VTBC) said in a note. “The outlook thus suggests a further reduction in renewables costs, coal decommissioning (to only 4-4.5% in electricity generation by 2050) and decarbonisation mode being activated. This supports our anticipated growth in renewables (to 12.5%
by 2050 in both scenarios) in the energy balance, which is a natural process in our view.”
Russian utilities have been starting to change their profile, but only slowly. The most advanced is the Italian Enel Russia, which has gone emissions-free after it sold its coal-fired Reftinskaya thermal power plant (TPP) in October 2019 and has been investing heavily into renewables.
Other big polluters like metallurgical giants Norilsk Nickel and RusAl have also been cleaning up their act and closing down high-emissions facilities as part of a drive to improve their environmental, social and governance (ESG) profiles that have affected their stock prices.
Electricity generation split outlook by MinEnergy
Changing European energy market
In wide-ranging comments Putin went on to describe the changing energy environment in Europe. Specifically
he lambasted Europe’s energy policies, saying that the EU had become over-reliant on wind power, which had underperformed this summer due to a “wind drought.”
He went on to stress that Russia was a reliable energy supply and had strictly been adhering to its gas new transit deal signed at the last minute with Ukraine in December 2019 that commits Russia to send 40bn cubic metres of gas via Ukraine’s Druzhba pipeline until 2024.
However, he reiterated the increasingly prominent Kremlin talking point that if Europe wants more gas it has to sign new long-term supply contracts with Gazprom. “We have to know how much gas our customers want,” Putin said. Even without these new contracts Gazprom is expected to ship a record amount of gas to Europe this year that is being sold on the spot markets on the St Petersburg commodity exchange.
The previous record exports of gas to Europe reached 200.7 bcm in 2018. In September Gazprom guided for 183 bcm of exports this year, but analysts say these exports will reach 190 bcm for this year and could easily be higher.
At the same time, Europe has seen a decrease in imports of gas from other source. Specifically he said that US LNG exports
to Europe have fallen by some 14 bcm – approximately the amount that is anticipated to be Europe’s gas deficit this year – drawn off to Asia by even higher prices than in Europe.
Putin added that Russia plans to export 10% more than the contract level via Ukraine to Europe (approximately 44 bcm in total). Russia has already increased supplies to Europe by 15% in 9M21, Bloomberg reported.
Gazprom has been rushing to fill Russia’s own gas storage tanks as it faces the same shortages as the rest of Europe. However, BCS GM reported on October 13 that Gazprom had resumed offering gas on the St Petersburg exchange, suggesting that the Russian tanks are now almost full. Gas
Electricity generation split outlook by MinEconomy
Source: Ministry of Energy, VTB Capital Research
Source: Ministry of Economic Development, VTB Capital Research
www.bne.eu