Carbon of other valences – Newspaper Kommersant No. 165 (7366) of 09/08/2022

The climate agenda in its new dimension has unexpectedly become one of the most popular topics of the Eastern Economic Forum (EEF) in Vladivostok. Just a few days after the launch of the national register of carbon units, government and business representatives had to discuss how the Russian version of decarbonization, which was created mainly based on rapprochement with the largest international players, would work in the conditions of a forced turn to the East. For large export projects, decarbonization remains very relevant, but now, apparently, Russian carbon regulation will need to be adapted to the conditions of importing countries, primarily China and the countries of Southeast Asia.

The question of what will happen with the Russian “carbon agenda” has become a rather important part of the WEF (the organizer of the forum is the Roscongress Foundation). Recallthat legislation for the Sakhalin experiment on carbon regulation in the Russian Federation was being prepared before a sharp change in the terms of foreign trade due to sanctions. September 1 started to work The Russian National Register of Carbon Units is a regulatory system within the framework of the climate agenda, which has been considered and is being considered by the Russian leadership, among other things, as one of the ways of non-conflict participation in world integration processes. By the opening of the WEF, the system had been formally operating in an experimental mode for several days.

On September 6, at the forum, the future of the market for voluntary carbon units was discussed with the participation of the Minister of Economy Maxim Reshetnikov, the head of the Sakhalin Region Valery Limarenko, the President of the RSPP Alexander Shokhin, representatives of the Ministry of Energy. On September 7, almost the same issues were discussed at a session with the participation of experts and infrastructure players (WWF, Karbonlab, SPbMTSB), as well as large export businesses (session co-organizers – Udokan Copper, Polyus, RusHydro, Norilsk Nickel , SUEK) more widely. On the same day, the prospects for “green bonds” in Asia were discussed at the round table of Gazprombank.

In general, at the WEF, the climate agenda was mentioned in a good quarter of the discussions.

The reasons for this are simple. The main part of carbon regulation and almost all of its ideology was based on the rapid integration of the core Russian national infrastructure (when it is built) into the conditional “Western” segment of the emerging global market – a community of projects related to climate change programs, the Kyoto Protocol, development programs under the auspices of the United Nations. The pilot regime on Sakhalin essentially focused on the presence in the region of such players as Shell, Exxon, Mitsui, Mitsubishi, although at an early stage it did not involve cross-border and even trans-regional operations with voluntary carbon credits.

After February, a significant part of the world infrastructure related to the trading of carbon units in projects, with quotas, international certification – validation of CO2 emissions, became inaccessible for Russia.

And because of this, the national regulatory system, for all its technical sophistication and well-developed legal framework, may end up as a closed domestic market.

Meanwhile, the problem of energy transition has long been perceived by Russian exporters as a working one – and, as it turned out during discussions at the WEF, due to the obvious reorientation of the main share of exports to Asian markets (China, India, South Korea, Southeast Asian countries) for integration “climatic” efforts of the Russian Federation with these countries require special efforts – and the experience of rapprochement with the conditionally “western” market segment is not always relevant. Thus, SUEK CEO Stepan Solzhenitsyn generally called for abandoning the ideology of “correct” and “incorrect” carbon transition schemes: the principles will be individual for each country, and it is apparently necessary to adapt the carbon trade agenda in each case separately. In this case, different solutions to the problem are possible. Thus, the deputy head of Udokan Copper, Yulia Shabala, called for the creation in the Russian Federation of a system for verifying CO2 emissions, which will be adopted in Asia, primarily in China, Korea, and Vietnam. Viktor Drozdov, a member of the Board of Directors of Polyus, believes that if this idea cannot be implemented, intergovernmental agreements with countries importing Russian resources on other mechanisms for offsetting the “green” component will be necessary.

It should be noted that in the future, perhaps, the convergence of the “Western” and “non-Western” markets for carbon units will occur – at the same time, as Andrey Sharonov, General Director of the National Alliance for Social and Environmental Responsibility, Corporate Governance and Sustainable Development, states, the rigidity of carbon regulation (within exchange mechanisms of “green” financing) on ​​the stock exchange in Hong Kong is now higher than in London. However, while the Asian and conditionally “Western” (they include, in particular, the Japanese market) segments in the future, presumably, a single “climate market” are not united – and for the Russian Federation this is a chance when restructuring export strategies. Moreover, as Yulia Shabala states, for Russian companies, carbon products are an additional added value. And in general, the popularity of the climate agenda in Russia in the business environment is an awareness of the opportunities that the position of the Russian Federation, which is unique from this point of view (a great potential for contributing to achieving carbon neutrality, which is mostly unrealizable now), brings, and they would be unpleasant miss out. Companies, based on the discussions at the WEF, are not only ready to do this – some of their large export projects were built taking into account the future, in which the climate agenda has no alternative.

Dmitry Butrin