Digest of the workshop "Russia’s Long-Term Low Carbon Development Strategy"

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Session 1. Russia’s and global low carbon transformation policy

Igor Bashmakov. General Director, CENEf-XXI. Moderator.
Low carbon transition is a challenging global task, which is unprecedented in terms of the required pace for large-scale global economic transformation. New technologies and markets will be low carbon. Which path will Russia choose: zero carbon, low carbon, or slow carbon?
Ruslan Edelgeriev. RF Special Presidential Envoy for Climate Change. On the way to COP-26. What needs to be done to give momentum to Russia’s low carbon transformation?
It is essential to provide for scientific knowledge-based discussion of the problem in the expert community.
The climate change issue must be above politics and should not be an area where the parties look for power re-distribution or for building artificial barriers. Cooperation between Russia and other countries should not be hampered by political factors.
It is important to identify and use our advantages and take account of our specific circumstances while figuring out the low carbon development pathways.
Russia should consider how and when it can become carbon-neutral. This appointment was given to the national government. The Advisory council should be involved in the process. Russia must not choose a business-as-usual approach, but take account of the national context. Independent assessments of the opportunities for the transition to carbon neutrality are important.
The goal set in the Presidential Decree No. 666 – “reduction up to 70 percent” – does not mean ‘precisely 70 percent reduction’; a more profound reduction in the emissions may be delivered. Russia’s ambition may also be affected by the potential of Article 6 of the Paris Agreement and by the decision taken for the North Stream-2 project.
The communication channels with the West should be left open for climate cooperation. Many other issues can be addressed through climate cooperation. The politicization of the process is unacceptable.
Petr Bobylev. Director, Department for competition, energy efficiency and ecology, RF Ministry of Economy. Draft ‘Russia’s Long-Term Low Carbon Development Strategy to 2050’.
The problem is front and center. Many countries have accumulated some experience. Russia is lagging behind and has wasted a lot of time. We can no longer trust only in forests and rely on the oil and gas revenues alone. We should take into account energy affordability, particularly for the residential sector, since personal incomes are much lower, than in the EC. We need to understand, where and how action can be taken. Special regulations are under way for the pilot project in Sakhalin. The government is giving a special attention to it. By the end of this year the regulatory framework will be much more comprehensive. We need to take measures with caution, thinking primarily about the efficacy. Carbon intensity has to go down. The climate problems on the agenda urge retrofitting.
The Strategy is difficult to coordinate. Forests can help make half of the way. Carbon test fields. Prove the absorption factors. The second half of the way is to be made due to emission reductions in other sectors. We can no longer afford just talking and not making any steps.
Russia’s Low Carbon Development Strategy to 2050 will be approved this summer. It is being finalized. The part of the Strategy that relates to potential carbon neutrality perspectives may become a stumbling stone.
Richard Baron. Executive Director, 2050 Pathways Platform. EC’s Green Deal: Moving Towards Carbon Neutrality
IPCC points out, that climate emergency is a defining factor of EU’s future development. ЕС understands, that it cannot resolve this problem on its own. The goal is 55% reduction in emissions (currently -28%) at no cost to the economic growth. The emission reductions are to be delivered in all sectors. The time horizon is to 2050. Some countries will lose, others will win. The scale of carbon capture technologies application is not clear yet, but these technologies will obviously be needed. The question is if people are willing to change their behaviour patterns. EC restoration plan -
EUR 1.8 trillion – greener, more digital and more resilient Europe – 2021-2027, 30% of the EU’s funds allocated for fighting climate change. Dedicated effort on research and innovation towards modernisation of the EU. Just Transition Fund (EUR 40 bn, triggering EUR 89-107 bn) for economic diversification and reconversion of territories concerned.
New sources of revenues: а carbon border adjustment mechanism (CBAM); а digital levy; the EU Emissions Trading System.
Governance: the EU Climate Law to make carbon neutrality legally binding for EU member states. To be decided with qualified majority (instead of unanimity). European Parliament as co-legislator.
Reform of the Emissions Trading System (heavy industry & electricity; possible extension to transport and building sector?) and CBAM.
Industrial policy & Circular economy; Energy Taxation Directive; the Sustainable Finance Taxonomy Regulation – defining ‘sustainable’ investments from the EU’s perspective.
Trade Policy Review: “Seek commitments from G20 partners on climate neutrality, strengthen cooperation on other aspects of the green deal, such as biodiversity, sustainable food policy, pollution, and the circular economy, and propose to make the respect of the Paris Agreement an essential element in all future agreements.”
The EU Green Deal and climate neutrality: defining Europe’s future recognizing and integrating climate change as an existential threat. Cannot fix the global climate alone, but other major economies are joining and bringing their own policy and technology pathways. Leading by example: climate neutrality by 2050 – and planning accordingly from 2050 back to today to minimise stranded assets.
Climate mitigation and adaptation integral to the EU’s recovery plan (infrastructure, finance, jobs, equity). No stones left unturned: all aspects of the EU’s policies checked for climate impact and updated to fit the purpose of climate neutrality by 2050 and -55% by 2030 (an additional 20% GHG reduction in 9 years). Redefines the EU’s trade and trade policy – climate neutrality to become a principle of economic activity in the EU, with implications for market access.
EC has outlined immediate measures, which will be reflected in a variety of regulations to attain the 2030 target.
The world has already selected the direction to move towards carbon neutrality, and this opens up new possibilities.
Kejun Jiang. Senior Researcher, Energy Research Institute, China. China’s transition to the carbon neutrality trajectory.
China has been exploring possibilities for carbon neutrality since 2017. On September 22, 2020, President Xi Jinping announced that China’s CO2 emission will peak before 2030, and the country will make an effort to reach carbon neutrality before 2060. China joined the countries which have announced their aspiration to become carbon-neutral. In the energy sector, it will reach zero emissions by 2050. Energy Research Institute is the only think-tank in China which is doing research in carbon neutrality. The results were pro-actively discussed by the government. China’s specificity includes an important role played by the nuclear sector (530 GW by 2050). The use of CCS is anticipated. This will help to simultaneously address the air pollution problem.
Energy transition is part of economic transition. Therefore, the following factors are considered: overall impact on the economic development pattern, transition in end-use sectors, new manufacture processes in some sectors. According to estimates, mitigation of GHGs may increase China’s GDP. Significant increase is envisaged in the industrial and transport sectors with the introduction of hydrogen-based processes with hydrogen use scaling up to 50 million tons by 2050. China leads globally in solar PV power generation (over 250 GW by 2020). In some locations, solar power is cheap enough to make hydrogen-based steel production competitive. So the economy development map will be changed via moving production to locations with very cheap renewable and nuclear energy. China’s overseas investments are increasing rapidly. Technology transfer via these investments may help other countries reach their GHG emission reduction targets. We hope to cooperate with Russia on this.
Transition to carbon neutrality will speed up China’s GDP growth for a number of reasons. Electricity becomes much cheaper, energy import costs go down, and revenues from hydrogen export to Japan, Korea and elsewhere increase; scaling up low carbon technology export; energy efficiency improvements and overall economic efficiency improvements. State-owned companies are required to announce their carbon neutrality targets for 2050 this year. Energy efficiency is number one policy option, particularly important in the building sector with the construction of super-low-energy-demand buildings.
Bridgette Burkholder. Associate, 2050 Pathways Platform. Status-Quo of Long-term Low Greenhouse Gas Emission Development Strategies.
As of March 2021, 2050 Pathways Platform includes 33 countries and a coalition of non-government agencies, cities, think-tanks, financial institutions. Its mission is to assist in the development of LTS. By now, 29 LTS have been submitted. By the end of 2021, over 50 more LTS are expected to be submitted. Many countries are working on revising their earlier submitted strategies and setting more ambitious goals, including Japan, Korea, and Canada. India and Indonesia are working on LTS with net-zero targets.
LTS and net zero are priorities for the UK COP26 presidency. UNSG Antonio Guterres has called on all world leaders to develop a plan to achieve net zero emissions by 2050. All G7 countries have net zero targets for 2050, and many G20 countries as well. China has announced at UNGA carbon neutrality “before 2060”, Japan and South Korea in late 2020, the new US administration and Canada establishing Net Zero Advisory Board. There are multiple actions at the sub-national level.
Race to Zero: Growing global campaign, bringing together leading net zero initiatives, representing thousands of cities, regions, businesses, big investors, and universities committed to net zero by 2050 at the latest. Some sub-nationals setting net zero targets ahead of the federal level: California (2045), Sakhalin region (2025).
There is no one-size-fits-all approach to the development of LTS.
Andrei Marcu. Founder and Executive Director of European Roundtable on climate change and sustainable transition (ERCST). Potential carbon border adjustment mechanisms.
58 countries have communicated a net-zero target, including: EU (as a party), Canada, USA, UK, Japan, South Africa, South Korea, China (by 2060), etc. Border carbon adjustments (BCAs) seek to alleviate the negative effects of asymmetrical climate policies. They can focus on three main objectives: level the playing field in competitive markets; prevent leakage of carbon emissions to jurisdictions with weaker policies; incentivise trade partners to strengthen their own climate efforts. 2030 Climate Targets: European Union is ahead of the curve compared to the rest of the world.
BCA discussion Status – climate diplomacy. White House carbon neutrality announcements. California – existing BCA for electricity. New York State – draft of a Carbon Pricing Proposal with a provision on BCA. US/China/EU cooperation – potentially covering more than 60% of global emissions. Canada and the provinces exploring the potential of a border carbon adjustment (Biden–Trudeau cooperation). UK – COP 26 and G7 presidencies. Ukraine – adopting EU’s acquis, potentially considering EU-like CBAM. China remains cautious towards the EU CBAM (trade issues). Japan is considering further carbon pricing and BCA.
Sensitivity Analysis for the Russian Federation. Depending on the CBAM design Russian companies may be forced to pay CBAM between 61 and 1,242 million euros. It seems that more gradual transition to CBAM based on deltas is a more probable option, at least at pilot stage with a possible modification after 2030.
Competition and carbon leakage is always a concern in the EU due to EU ETS. It is addressed through: free allocation for direct emissions; financial compensation for indirect costs (electricity). At times of economic recession there are low EUA prices, partly due to international credits under the KP. As the world changes and so do the circumstances, the old methods may not work for the EU.
European Commission’s main options. A tax is applied at the EU border on the imports of products manufactured in the sectors that are at risk of carbon leakage. This could be a border tax or a customs duty. An extension of the EU Emission Trading Scheme to imports requiring the purchase of emission allowances under the EU ETS by either foreign producers or importers. Carbon tax (e.g., excise or VAT type) at the consumption level for products manufactured in sectors that are at risk of carbon leakage. The tax would apply to the EU production, as well as to the imports. The obligation to purchase allowances from a specific pool outside the ETS dedicated to imports, which would mirror the ETS price.
European Parliament’s own initiative. Policy mechanism: notional EU ETS (or evolving tax that mirrors the dynamic evolution of the EUA price). Coverage of trade flows: imports + possible export rebates limited to the EU’s best performers under certain caveats (WTO compatibility, environmental performance). Geographic scope: possible exemptions for LDCs and SIDSs (or/and use of revenues for climate finance in LDCs and SIDSs). Sectoral scope: pilot CBAM for power, cement, steel, aluminium, oil refinery, paper, glass, chemicals and fertilisers as of 2023, and eventual roll-out to all products/commodities covered by ETS sectors; coverage of intermediate and final products in the value chain (timing unclear, could be later, rather than from the outset). Emissions scope: Scope 1 and Scope 2 emissions; recognition of full life-cycle emissions importance, but no desire to cover Scope 3 at this stage. Approach to determining embedded emissions: use of national/installation-level carbon intensity data in exporting countries; where these data are not available, global average carbon intensities of individual products taking into account specific production methods. Crediting for foreign climate policies: ensure crediting; open to interpretation whether crediting only refers to carbon pricing policies. Use of revenue: EU own resources supporting domestic climate and EGD objectives (EU just transition/decarbonisation) and contributing to international climate finance in favour of LDCs and SIDSs. Treatment of existing carbon leakage measures: gradual, eventually complete, phase out.
Our Approach: Decomposing, Evaluating & Comparing. Design Elements: coverage of trade flows, policy mechanism, geographic scope, sectoral scope, emissions scope, determination of embedded emissions, calculation of adjustment, use of revenue. Evaluation Criteria: environmental benefit, competitiveness benefit, legal feasibility, technical and administrative feasibility, political feasibility, material neutrality, global environmental benefits. Scenario-Building: ‘Most probable’; ‘Play it Safe’; ‘Go Getter’. Comparisons with alternative instruments.

Session 2. There are more than one way to the future. Long-term low carbon development scenarios for the Russian Federation

Tatiana Mitrova. Professor, Academic Director of the Skolkovo Energy Center. Moderator
The threat of lost economic growth is the key barrier to the discussion of the low carbon issues. 2018 Skolkovo research underestimated the potential reduction in hydrocarbons demand. 50 percent in Russia are eligible for tax benefits, and this figure will reach 80 percent by 2030. The government will provide financial support to Rosneft in Taimyr. COVID-19 has given us a test drive by enabling us to see what development without high oil and gas revenues is like. This session will introduce different viewpoints, and the question is what choices we will make.
Evsey Gurvich. Chief of the Economy think tank. Russia’s economic development: current problems and upcoming challenges
There is nothing to lose, but not much to find either. Russia’s GDP growth perspectives are estimated at 2% per year. Few people believe that these can reach 3%, as wished for by the Russian government. Some projections estimate GDP growth rate at only 0.5% per year. This is the worst absolute indicator among 46 countries for which such projections were developed.
The fraction of the oil&gas sector in the Russian economy is about 20%. The oil and gas rent fluctuates around 14%. Oil&gas revenues amount to some 20% of all budget revenues and to 40% of the revenues of consolidated budget. The fraction of oil and gas in the national exports is 55-58%.
The Russian government and the Central Bank are seriously working to make our economy independent from the external situation (the floating ruble exchange rate; budgetary rules).
While we can hardly count on a new rise in oil prices, we need to launch the intensive growth pattern which is based on the domestic, rather than imported, sources. One key condition for intensive economic growth is a substantial increase in energy efficiency.
Energy intensity decline has stopped. If energy efficiency does not improve anymore, estimated average growth rates will fall below 1%. Faster GDP growth rates, if not accompanied with energy efficiency improvements, will make us net-importers of oil and gas.
Igor Bashmakov. General Director, CENEf-XXI. When can Russia become zero-carbon? Low carbon social and economic development scenarios
It is absolutely impossible to double Russia’s GDP by 2050 and catch up with the global economic growth rates if we follow the ‘red economy’ pattern! We are anxious not to lose the high economic growth if we switch to low carbon development, but one cannot lose what one does not have. Accelerating to the average global growth rates is not ‘given’, but needs to be ‘proved’. We aspire to keep our market niches in the traditional markets, but they will be shrinking, and this is beyond our control!
Energy consumption and production structure is dramatically changing. Minus fuel, plus electrification. In the industrial sector, we should not only reduce GHG emissions from combustion, but also from industrial processes, and indirect emissions. As the energy efficiency improvement resource is getting exhausted, the accent shifts towards electrification, circular economy, reduction in material intensity, and replacement of carbon intense feedstocks.
In order to minimize the loss from CBAM mechanisms it is important to establish a benchmarking system for carbon intensity of industrial products; reduce carbon intensity of industrial products; reduce carbon intensity of power and heat generation and introduce carbon regulation mechanisms.
Transport: dramatic shifts towards electric cars, public transport, and personal transporters. In 2050, half of the residential sector will be comprised by the already existing buildings. Therefore, the focus is on the reduction in specific energy consumption for space heating (70% down from the 2000 level in new apartment buildings and 90% down in individual (passive) houses). The fraction of residential houses with capital retrofits by energy efficiency standards should grow up to 2% annually. Heat savings in Russian apartment buildings can be delivered at a cost 10-30 times lower, than in the EU. Carbon neutrality cannot be achieved through increased forest absorption alone. In Russia, we have experience in the application of all low carbon technologies, but for many of them the application scale (by the few enthusiasts) is still very moderate. We need to increase them if we want to enter the new low carbon markets, which will outdo the fuel markets by the middle of the century.
Since there are no model simulations beyond 2050 in Russia, only a speculative assessment of Russia’s perspectives in terms of carbon neutrality can be made. It is essential to extend the projection horizon and make additional interdisciplinary research to estimate the potential and schedule for Russia’s carbon neutrality.
Igor Makarov. Head of global economy department, global economy and global policy faculty; Chief of climate change economics lab, Higher School of Economics. Low carbon development in fossil fuel-dependent countries: lessons for Russia
Motivation in fossil fuel export-dependent countries may be different from that in ‘enthusiastic’ countries. The level of economic development is also important. Modernization largely depends on the cost of capital. Climate change is not an environmental priority for Russia. Major goals include: adaptation to the new global economic and energy landscape; diversification (through the development of non-fossil fuel sectors); modernization (through energy efficiency and promoting green technologies); balanced use of all clean technologies (nuclear, hydro, CCS, new renewables, climate-smart forestry and land use); addressing other environmental problems (air pollution).
In any scenario that takes account of the Paris Agreement, Russian energy exports in 2030 are 20% down (in energy terms) from the Reference scenario. By 2050, the corresponding reduction reaches 25% for INDC and 64% for 2 degrees. GDP growth may lose 0.5%.
Larger focus on emissions from consumption. Wider use of demand-side policy instruments directed at consumer behavior, infrastructure, construction, etc. Linking climate agenda with the inequality (regulation of over-consumption). Special accent on consumption-based emissions in international negotiations (together with BRICS). Policy instruments: specifics of carbon pricing in fossil fuel-dependent economies: balanced emission coverage; gradual tightening of carbon price; gradual elimination of fossil fuel subsidies; additional support measures for vulnerable industries and social groups; integration of the carbon price into the system of existing taxes in the energy sector; fiscal neutrality; applying carbon offsets. Demand-side policy instruments.
Alexander Shirov. Correspondent Member, Russian Academy of Science; Director, Institute of Economic Forecasting. Sustainable development, climate, and economic growth: strategic challenges and solutions for Russia.
The inertial scenario of GDP growth for Russia implies 11.8% growth to 2025, 1.5% annually to 2026-2050. And the contribution of the cumulative factor productivity is way below 0.5%. 1% of potential GDP growth is lost. However, there is a growth potential if the quality of economic growth changes. There are decarbonization options too, the problem is the cost. The cost of reducing emissions through RE is just too high. Yet this is not to say that RE should not be developed. The task is to make them cheaper.
In the baseline scenario, GHG emissions grow up to 90% of the 1990 baseline, in the sensible scenario to 58%, in the aggressive scenario to 17%, while the economic growth shows annual slowdown between 2 and 3.4% in different 5-year periods and 1.8% on average to 2050.
Georgy Safonov. Director, Center for environmental economics and natural resources, Higher School of Economics. Deep decarbonization pathways for Russia: barriers, opportunities, and perspectives.
GHG emissions from the energy sector keep growing. The Energy Strategy projects fossil fuel consumption growth to 2035.
There is a good potential for profound decarbonization of the economy, even if we assume a 3-fold GDP growth to 2050. However, such scenarios are unlikely in Russia for the lack of the following: understanding that decarbonization is inevitable; desire to really switch to the ‘green’ alternatives; willingness to change the long-set business-models. There is an aspiration to get the maximum revenues from the sales of fossil fuel and carbon-intense products, as long as there is demand for such goods. But there is no understanding, that decarbonization is a large-scale deployment of not only ‘breakthrough’, but also of ‘disruptive’ innovations.
The carbon footprint of the Russian exports is estimated at 2481 MtCO2eq. If there are no more Russian carbon-intense exports, fugitive emissions would go down by more than 130 mln tCO2eq/year; from fertilizers production and iron and steel by more than 100 mln tCO2eq/year. However, the question is, how to make up for these ‘falling out’ revenues?
Russian companies or regions have no vision of zero carbon future.
Vladimir Potashnikov. Senior Research Fellow, Center for energy sector and environmental modeling, Russian Presidential Academy of National Economy and Public Administration. Low Carbon Development: a driver or a brake for the economic growth?
Demand for Russian fuels from both EU and China (important partners for Russia) will decline due to low carbon transition effects and negative demographics. Russia has low ambitions about: renewables, decarbonization, and electric vehicles. There is a plan for gray hydrogen export (about 2 Mt by 2035).
In the DDP project, CO2 emissions alone drop below 15% of the 1990 level by 2050. Russia can make the cost of decarbonization lower. The problem of inertia and narrow-mindedness in making decisions about the relatively distant future. If there is carbon tax, it will be collected into the national budget. The costs of profound decarbonization are relatively low. The high costs of RE in Russia need to be explored, because on the global level RE are already competitive with the fossil fuel-based generation. By our estimates, the implementation of DDP can yield up to 40% of the GDP increase by 2050.

Session 3. Low carbon transformation in the energy and industrial sectors

Oleg Pluzhnikov. Member of General Council, ‘Business Russia’ Organization; Development Director, National organization for support to carbon absorption projects.
Climate policies should be comprehensive. No stone should be left unturned. One stone is the energy and industrial sectors. Another is forests, but they are less important. The Energy Strategy is a controversial document. It really says little about the emission control, although it includes some interesting things about individual technologies. The conservative position towards the energy sector transformation is dominating. There is not a single document to identify Russia’s specificities in terms of switching to the low carbon pathway. Our priorities, energy efficiency, RE, our fuel export plans for the shrinking markets – all these are unclear. What needs to be done to ensure decarbonization of the energy and industrial sectors?
Igor Bryzgunov. Board Chairman, Russian Association of Wind Power Industry. The future of renewable energy in Russia: the long-term aspect
1,115 MW is the total installed capacity of 878 renewable plants in Russia as of 18.03.2021. More than 1,500 MW of RE are being designed and built at the moment. The geographical coverage is expanding. RE plants are being built in the off-grid areas.
A whole new industry has been created to manufacture the equipment for wind energy-based power generation and the localization targets have been met. The costs of the DPM-2 programme are estimated at 177 bln rubles; these will be used to commission 300 MW per year, or 3,000 MW to 2035. New markets are being developed for wind energy-based power generation, including the ‘green certificates’ and ‘green’ hydrogen.
Vitaly Papushkin. Academic Director, Heat supply department, VTI. Is there a future for 4G heat supply systems in Russia?
In all, there are nearly 76 thousand off-grid DH systems in Russia. Industrial DH systems (49%) are those with high temperature heat carrier to supply heat for high temperature processes. Residential DH systems (51%) use low temperature heat carriers. They are what we are going to discuss today. 4G systems primarily seek to bring down the temperature of the heat carrier to 30-70оC to involve the RE resources and thus reduce fuel consumption. Russia is currently between the second and the third stages of generation. 43% of residential consumers are provided with domestic hot water from space heating systems. DH systems amount to 84% of heat supply in Russia. There are 52 thousand DH systems in the country, including 44 thousand municipal systems. Only 22% of all residential and public buildings meet the 3G requirements for specific heat consumption for space heating and ventilation (the rest are 2G).
Only 63% of apartment buildings built in 2019 can be considered energy efficient. 94 buildings in 151 projects are LEED-certified; 63 buildings are BREEAM-certified; 68 are GREEN ZOOM-certified.
The key problems related to 4G transition in energy supply systems include: new design requirements to buildings insulation and to heat-consuming installations in space heating and ventilation systems; new requirements to the organization of heat transfer from the individual heating point to radiators (namely, horizontal piping); to automated heat controls in space heating, ventilation (air conditioning), and domestic hot water supply in buildings – in other words, transition to the international design standards. So far little has been done in this respect.
It is essential to decrease the temperature of heat carrier in distribution heating networks. However, it is impossible to transfer large municipal DH systems to a lower temperature of heat carrier (heat pipes are 1,400 mm in diameter). New requirements should be specified for the organization of municipal DH systems with different heating loads (like in the Greater Copenhagen and other large DH systems). 30 thousand municipal DH systems (up to 50 Gcal/hr demand) can meet the 4G transition requirements to 4G heating networks after the new working requirements are met. New materials should be used in heating networks. And it is important to explore the potential for hydrogen use in DH systems.
Irina Gaida. Executive Director, Skolkovo Energy Center. Methods and international practices for the decarbonization of the oil and gas sector.
GHG emissions from the oil&gas sector amount to 12% of the total anthropogenic emissions and are comparable with those from the agricultural sector. Over the recent 15 years they have grown up 1.8-fold, while the extraction has grown 1.3-fold. Contribution of the gas industry (40%) is smaller, than that or the oil industry (60%). Methane emissions are a serious problem amounting to 45% of the total emission.
Vertically integrated oil companies (VIOC) are integrating decarbonization in their management strategies. Oil&gas companies are making increasingly ambitious climate commitments. VIOC are proactively investing in the petroleum industry to expand the range of products they offer and address the problems related to the utilization of associated petroleum gas. RE is intensely used for energy supply to industrial plants. CO2 underground storage. It is essential to make regulatory changes, geological and engineering research.
There are examples of decarbonization of Russian vertically integrated oil companies. Recommendations were provided for Russian oil&gas companies, including the development of low carbon strategies, the use of internal CO2 prices, reporting, development of adaptation plans, development of hydrogen production, etc.
Sergey Sementsov. Head of Green Economy Direction, VEB.RF. Financing for low carbon transformation
Foreign investments are an accessible tool even in the current situation. Taxonomy helps foreign investors select projects which will be accepted by their regulators. Sanctions are a serious barrier to investment. However, so far there are no exclusions for either climate or green projects.
How can we arrange investment flows in the right direction? Develop uniform rules for the Green financing system. There are many investment support instruments in Russia, yet they are deployed in different industries, sectors, regions, but are not coordinated with one another. None of the support instruments was designed to directly stimulate low carbon development.
Potential stimulation measures. According to Sberbank, this instrument helps attract up to 10 rubles in private investment per ruble of government funds. Possibly – extension of Government Decree No. 541 to cover ‘green’ projects. Regulatory benefits for investors/creditors. Tax benefits for investors/creditors/initiators. Special incentives for emission reduction. Support for climate projects. Emission trading system. The incentives will be tested in the Sakhalin project.
National ‘green’ financing design. The methodology includes: (i) national taxonomy, including qualitative and quantitative criteria); (ii) methodological recommendations; (iii) model methodology for verification; and a number of other documents. The package of documents that determine the green financing infrastructure was approved by the international working group. Taxonomy of green projects in Russia (with qualitative and quantitative criteria) was approved by the international working group on March 16, 2021. Taxonomy of transition projects in Russia (with qualitative and quantitative criteria) was approved by the international working group on March 16, 2021.

Session 4. Low carbon transformation: the potential in other sectors

Anna Romanovskaya. Correspondent Member, Russian Academy of Science; Director of Academician Izrael Institute of Global Climate and Ecology. Moderator
Happy to hear that we have low carbon technologies deployment experience both in the buildings and transport sectors.
Natalia Lukina. Correspondent Member, Russian Academy of Science; Director, Center of Forest Ecology and Productivity of the Russian Academy of Science. The role of Russian forests in the implementation of long-term low carbon development strategy.
20% of total forest-covered area are in Russia. Forests cover 1,179 mln ha. Improving the efficiency of forestry and decarbonization of economy. Transition to afforestation. Forest-covered area is not as important for wood harvesting as the afforestation technologies. It is important to get a large variety of ecosystem services from forests. Bioeconomy yields a wide range of products. By its Decree No. 3 of 20.01.2021 the RF Ministry of natural resources adopted a new methodology for estimating emissions from, and absorption by, Russia’s forests, which resulted in the increase in the absorption from 600 to 1,200 mln tСО2. This new methodology requires more than just reliable data: it requires a special observation network. The Russian Academy of Science believes, that as the managed forests category is growing so much, these forests must be truly managed. Preservation of mature forests. Fire protection. Forestry development strategy assumes increasing timber harvesting. As a result, net absorption by forests will decline by 2050. It is important to improve forests protection. In the years of peak forest fires, Russian forests seize being a sink and turn into a source of GHG emission. Evergreen coniferous forests are drying up. One key policy may be agroforestry. A new Forest Code is required.
Yuri Trofimenko. Head of department, Moscow road vehicle technical institute, Head of energy and environmental research institute for road transport. How will Russian car fleet change by the mid-21st century?
It is important to change transport priorities, develop artificial natural/technical and information ecosystems, manage people’s mobility, and develop symbiotic human/machine systems which use the intellectual potential of the driver to make decisions.
Key problems of gas-powered cars market include: low price competitiveness relative to petrol- and diesel-powered cars; narrow range of models; relatively poor operation characteristics; shortage of gas cylinder production capacities. It costs 400 mln rubles to switch 200 buses to natural gas. Natural gas gives an opportunity to test the technology of switching to hydrogen.
The fraction of electric vehicles in the Russian market may amount to 5% by 2025 (130 thousand cars). In 2020–2025, reduced cost of batteries will help increase the demand in the medium price segment in the Russian market. The sales rates for electric vehicles beyond 2025 will be largely determined by the development of charge infrastructure in Russia’s regions. Producers are switching to the manufacture of electric vehicles. If we lag behind in this, we will end up with a technologically backward automobile industry.
The problems include: high prices for electric vehicles; lack of battery recycling infrastructure; poor legislation in the area of usage/sales of power stored in the batteries.
Hydrogen filling stations. Of all filling stations built between 2004 and 2017, 8% deal with liquid hydrogen, others with hydrogen gas. Car filling takes 3-5 minutes.
Key policy recommendations: improving the efficiency of vehicles and transport technologies that use traditional fuels; diversification of energy sources for vehicles to reduce CO2 emissions; mobility management. Tentatively, in 2050 we can end up with a complete decarbonization of automobile transport.
Nikolay Shilkin. Professor, Moscow Architectural Institute (state academy). Editor-in-Chief, ‘Energy Conservation’ magazine. Low carbon buildings construction: Russian case study.
The Moscow experience shows, that savings of heat for space heating and ventilation in apartment buildings can practically amount to 43%. In apartment buildings where a number of measures, including heat pump installation, were implemented, heat costs reduction was 40%. Improving the efficiency of ventilation becomes the key factor, as the space heating savings potential is getting exhausted. Further measures include: improving of thermal resistance of external walls; optimization of individual heat points installation; switch to flat-level space heating; switch to mechanical ventilation with exhaust air heat recovery; the use of flat-level heat controls. The remaining about 17 kWh/m2 can be covered by RE.
Irina Govor. Senior Research Fellow, Academician Izrael Institute of Global Climate and Ecology. The waste sector: how can we reverse the emission growth trend?
The amount of solid municipal waste keeps growing in Russia. Disposal at landfills remains the key waste handling method. GHG emissions from waste amounts to 70.8 mln tСO2eq., which is 112.3% of the 1990 level. Basic documents that regulate the handling of waste do not include measures to estimate and regulate GHG emissions. For the current projects, GHG emission reductions is not a key goal.
Reduction of waste formation (particularly municipal solid waste), deployment of waste sorting and recycling technologies, development of low carbon treatment technologies will result in reduced GHG emission. The best method for quick reduction of GHG emissions is biogas collection and flaring at MSW disposal sites (and other measures at MSW disposal sites). Potential emission control mechanisms are not fully deployed. It is important to ensure that national waste handling measures are linked to the national climate priorities. Theoretically, this sector can become carbon-neutral.