Greenhouse gas emissions regulation in fossil fuels exporting countries: opportunities and challenges for Russia

ABSTRACT

A carbon price is considered the most cost-efficient greenhouse gas emissions reduction tool often used as part of a climate policy. However, Russia and the other countries rich in fossil fuels tend to have weak incentives for proactive climate policies including carbon pricing which may lead to falling revenues in emitting industries. Can the carbon price be implemented as part of the development strategy in fossil fuel exporting countries, including Russia? The paper analyzes the variety of existing approaches to applying the carbon price across various energy exporting economies. The paper contributes to the existing literature with the analysis of challenges and opportunities of carbon pricing in these countries and proposes key principles of a viable carbon pricing system in Russia. These principles are (a) balanced emissions coverage and support of vulnerable industries and social groups, (b) fiscal neutrality, (c) gradualness of implementation and (d) use of carbon offsets.

KEYWORDS:

• Carbon price
• fossil fuel exporting countries
• Russia
• climate change
• low-carbon transition

Acknowledgments

This work is an output of a research project implemented as part of the Basic Research Program at the National Research University Higher School of Economics (HSE University). Support from the Individual Research Program of the Faculty of World Economy and International Affairs at National Research University Higher School of Economics is gratefully acknowledged.

Disclosure statement

Authors declare no competing interests.

Notes

1. Calculated by authors based on World Bank Open Data. Retrieved 7 April 2021, from https://data.worldbank.org/

2. Based on World Resource Institute, CAIT Climate Data Explorer, Historical GHG Emissions. Retrieved 7 April 2021, from https://www.climatewatchdata.org/

3. Ibid.

4. Ibid.

5. According to UNFCCC. NDC registry. Retrieved 7 April 2021 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Russia%20First/NDC_RF_ru.pdf

6. According to the draft of the Federal Law on Limiting GHG Emissions. Retrieved 25 April https://sozd.duma.gov.ru/bill/1116605-7

7. Calculated by authors based on UNFCCC emissions inventory data

8. Authors’ calculation based on IEA World Energy Balances and the data provided by the subnational authorities

9. Based on IEA. World Energy Statistics and Balances. Retrieved 11 October 2020 from https://www.iea.org/subscribe-to-data-services/world-energy-balances-and-statistics

10. Excluding emissions from LULUCF.

11. Based on the ratio of MET taxes to total CO₂ emissions from the burning of fossil fuels

12. There is also a different issue of diffusion of values across the international organisations. Recent studies looked into how international organisations in post-Communist Eurasia (especially those led by China and Russia) interact with other IOs in the region and in global economic system (for summary, see Libman & Obydenkova, 2021a, p. 2021b).