Russian industry responses to climate change: the case of the metals and mining sector

ABSTRACT

Globally, the metals and mining sector is a major contributor to GHG emissions. Climate change also poses significant challenges for the industry in a number of ways, including risks to infrastructure and equipment, transport routes and the cost of energy supplies. The sector is of particular importance to Russia, and yet very little is known about how the sector positions itself in relation to this key issue. This article conducts an in-depth look at the response of the Russian metals and mining sector to climate change. It looks at the key actors, their willingness to engage with the issue of climate change, preferred policy options and the strategies adopted to further their interests. The role of companies, prominent individuals and business associations is considered. The evidence suggests that, although there is widespread acceptance of climate change as a phenomenon, there is significant variation within the sector, with some companies proactive on climate policy, and others more reluctant. Different responses are attributed to reputational factors and the disproportionate influence of international and domestic policy developments on companies. Russian coal companies, directly threatened by any international attempts to reduce coal consumption, display the strongest opposition to efforts aimed at curbing emissions. The Russian government, far from thinking of transitioning to a low carbon future, is vigorously trying to expand the coal industry.

Key policy insights

• Understanding how Russia’s domestic position on climate policy is formed is fundamental for understanding the factors driving its international engagement on climate policy.

• The Russian government has no plans to phase out coal and is instead actively seeking to expand the coal industry. This highlights the obstacles to Russia’s commitment to climate policy at both the domestic and international levels.

• The socio-economic consequences of climate policy for the Russian coal industry are a key consideration for the government, with some regions heavily dependent on the industry for employment and electricity generation.

KEYWORDS:

• Climate change
• coal
• environment
• metals and mining industry
• Russia
• state–business relations

Acknowledgements

The author would like to thank the participants of the ‘Soviet and Post-Soviet Imaginings of Climate’ workshop held at King’s College London in March 2017 for helpful suggestions on an earlier version on this article. Thanks also to Stephen Fortescue and Alice Mah for insightful comments. This article is made possible with support from the Centre for European Studies at the Australian National University.

Disclosure statement

No potential conflict of interest was reported by the author.

ORCID

Ellie Martus http://orcid.org/0000-0001-5433-9120

Notes

1 Hybrid regimes, such as Russia, combine elements of democracy and autocracy, such as regular elections, the presence of legislatures and political parties, and limited competition within the mass media.

2 Palladium is a platinum group metal used primarily for making catalytic converters in cars but has a range of other uses including jewellery and in the electronics industry.

3 Russia’s Strategic Sectors Law (Federal Law No. 57-FZ, 29 April 2008) places limits on foreign access to areas of the economy designated as ‘strategic’. The law requires approval by the government of foreign investment in activities that hold strategic importance (article 6), including the geological study, exploration and extraction of minerals in subsoil blocks of ‘federal significance’ (point 39). This includes diamonds, nickel, platinum metals and uranium.

4 UNFCCC reporting guidelines require Annex I Parties to the Convention (including the Russian Federation) to provide an annual GHG emission inventory broken down by sector.

5 This includes the production of iron and steel, ferroalloys, aluminium, magnesium, lead and zinc.

6 This includes the production of cement, lime and glass.

7 Russia does not provide separate statistics for category 1.A.2.b (non-ferrous metals) and f (non-metallic minerals).

8 According to ICCM, ‘Polyus Gold was recommended for membership by an independent expert review panel in a process that closely scrutinizes the adherence of the applicant company to responsible social and environmental performance in mining and metals operations’ (ICCM, 2015).

9 The other is the Svirin Family, a furniture retail business.

10 For more detail on the policy, see Martus (2017b, pp. 133–135).

11 It is also worth noting that a key motivation for Deripaska and Rusal is trying to ensure the competitiveness of Russian aluminium in the face of Chinese exports. Rusal has pointed out on numerous occasions that 90% of electricity used in its smelting plants comes from hydroelectricity, whereas China’s smelters are powered by coal (see for example, Mukhamedshin, 2017).

12 State Programmes are important strategic documents which outline a set of activities, objectives and details on implementation in a specific priority area for the government and individual ministries (see Portal Gosprogramm RF, n.d.-a).

13 The Kyoto Protocol committed Russia to not exceed its 1990s level of GHG emissions. As noted above, economic decline in the 1990s meant that this required little effort to achieve.

14 According to Anatolii Chubais, CEO of nanotechnology company Rosnano, Russian business support for the climate talks was originally to have been sent through the RSPP but an ambiguous reaction from the organization prompted the launch of the CPR initiative instead (see Davydova, 2015).

15 Other members include Rosnano, hydroelectricity company Rushydro, and several of Russia’s largest banks including Sberbank, Alfa Bank and VTB