Russia’s ‘Green’ Agenda in Action: Economic Tools and Political Motivations (Part One)

On April 19, during the presentation of a report compiled by the World Meteorological Organization (WMO), United Nations Secretary General António Guterres stated that 2021 would become crucial for fighting climate change. To underscore the seriousness of the problem, he mentioned Verkhoyansk, in Russia’s northern Republic of Sakha (Yakutia), where, the previous year, the local temperature hit 38 degrees Celsius—the highest ever recorded for this circumpolar region (TASS, April 19).

The climate change agenda has become one of the central themes promoted by the major global powers, including the United States, European Union, China and Japan (Voeikovmgo.ru, March 9). For its part, Russia does not want to miss a chance to have a say in an issue of such political and economic gravity and importance. In the past two months, Russia made two key steps highlighting its determination to become one of the main actors in the global climate change agenda. First, Moscow listed climate change as one of the key postulates of its Arctic Council chairmanship (2021–2023) (Arctic.ru, May 17; see EDM, May 13, 24, 26). And second, Russia published a report of strategic importance entitled “Turn to Nature: Russia’s New Ecological Policy in Light of the ‘Green’ Transformation of Global Economics and Politics” (Globalaffairs.ru, April 2021). This document—co-authored by Sergei Karaganov, Russian President Vladimir Putin’s former advisor and one of the architects of Russia’s vaunted but dubious “Pivot to Asia” (see EDM, November 24, 2020 and June 8, 2021)—outlines Moscow’s strategy to become one of the world’s leaders in the “green” agenda. Namely, “securing and preserving nature must become an essential part of Russia’s national identity, a mission for the country itself and the entire world, [and] an important element of Russia’s international identity; whereas, international cooperation in the conservation of nature should become Russia’s important contribution to the preservation of peace and a part of [Russia’s] international attractiveness and authority.” The strategy—openly critical of the West—draws on the necessity for Russia to confront the Western-promoted style of the “green” agenda due to its protectionist and discriminatory nature, which will do nothing but “reaffirm Western economic domination” over the less developed parts of the world, the document proclaims.

Russia’s main motivation in pursuing such a “green” agenda and anti–climate change policies rests on two major motives.

First are geopolitical objectives. Russia aims to use climate change to strengthen its role as a global actor, promoting an alternative to Western-dominated international forums and institutions—such as by raising the authority of the G20 and BRICS (Brazil, Russia, India, China, South Africa). Furthermore, Russia seeks to use this agenda to fortify its dominant role in the Arctic, confirming its position as one of the two (along with the United States)—in Russia’s view—main regional actors (Kommersant, March 9).

Second are geo-economic objectives, themselves premised on four pillars:

– The “Chinese factor.” China, a key importer of Russia’s energy resources, has pledged to achieve full carbon neutrality by 2060 (Lenta.ru, May 20). This goal is primarily based on a strategy of accelerated urbanization—approximately 400 million Chinese peasants are to be relocated to cities during the 14^th five-year plan—which will drastically increase energy consumption and might result in large extra expenses for China’s state budget due to the necessity of purchasing more energy abroad. Preliminary estimations show this could result in a deficit in China’s trade balance (Russtrat.ru, May 14). Incidentally, the Chinese firm Sinopec has already declared it will gradually decrease operations utilizing non-renewable energy, making “hydrogen energy the main goal of its new energy businesses” (Naturalgasworld.com, March 30). For Russia, this is a wakeup call, necessitating a rethink of its non-renewable energy-related policies and expectations.

– The “European factor.” The EU is also actively pursuing a de-carbonization strategy. One of its main pillars is a carbon tax (to be prospectively introduced in 2025), which could have severe consequences for Russia. Namely, a report produced by the Institute of Problems of Natural Monopolies (IPEM), entitled “Transborder Carbon Regulation in the EU: How to Avoid Discrimination of Russian Exporters,” stated that the direct impact of the tax on Russian energy exports could be up to $2.2 billion per year (Ipem.ru, May 2021). This, however, is not the worst-case scenario: some experts claim the direct annual cost could potentially exceed $5 billion (Vedomosti, May 27).

– Changes on the global financial markets. As the first deputy head of Gazprombank, Roman Panov, indicated, in order to avoid Russia’s  marginalization in global financial securities (bonds) and crediting, its policy with regard to “green bonds” needs to be strengthened. According to the Climate Bonds Initiative (CBI), the global scope of “green financing” has reached a staggering $1.2 trillion. Thus, for companies demonstrating a commitment to ecological sustainability, it is much easier to receive funding for large projects in the energy sector, transportation and infrastructure, as well as waste management (Vedomosti, May 11).

– Looming transformations in the global energy industry. While leading Russian energy and environmental experts agree that, realistically speaking, full de-carbonization by 2060 is more of a political claim than a realistically achievable objective, there is understanding that the global energy architecture is bound to change in the upcoming three decades. As noted by Yevgeni Kiselyov, deputy minister for natural resources and ecology and the head of the Federal Agency for Mineral Resources (Rosnedra), the share of hydrogen—a renewable energy source, currently viewed by the world’s largest economies as one of the main sources of diversification away from non-renewable energy—is bound to skyrocket in the global energy mix by 2050. He also noted that Russia may utilize its  competitive advantages in hydrogen production—vast natural resources, geographic proximity to potential export markets, rich scientific potential and functioning transportation infrastructure—to seriously consider investing in the production of hydrogen to boost its exports, especially given the decreasing role of traditional energy sources. Prospectively, Russia could become one of the global leaders in production and exports of hydrogen (Rosnedra.gov.ru, March 30).

Russia’s “green” agenda is, thus, primarily driven by a combination of geo-economic and geopolitical factors. On the one hand, Moscow seeks to use this agenda to confront Western institutions and increase its own (geo)political weight and prestige. On the other hand, however, changes in the global energy architecture are themselves forcing Russia to diversify its investments in “green” energy as a means of boosting its energy exports and making up for potential future losses.

*To read Part Two, please click here.