Implications of the Global Energy Transition on Russia
James Henderson, Tatiana Mitrova
Abstract
The chapter provides Russia`s regional insight, aimed at analysing the geopolitical implications of the global energy transition on one of the world’s leading energy-producing countries, as well as an overview of Russian energy policy in the context of the global energy transition. Russia, which ranks fourth in the world in terms of primary energy consumption and carbon dioxide emissions, is adhering to a strategy of “business as usual” and continues to rely on fossil fuels. Energy export is critical for the state budget, for the key energy companies and for many regions in the country which strongly rely on hydrocarbon revenues. But the changing global environment and decarbonization agenda pose an existential threat for all the key Russian stakeholders, challenging the very sustainability of the economic (and political) system in the country. Despite the fact that in September 2019 Russia joined the Paris Agreement, domestically decarbonization of the energy sector is not yet on the agenda: a sceptical attitude to the problem of global climate change prevails among stakeholders. GDP energy intensity remains high, constrained by relatively low energy prices and high capital costs. The share of solar and wind energy in the Russian energy balance is insignificant and, according to official forecasts, it is not expected to exceed 1% by 2035. The challenge for Russia in the coming years is to develop a new strategy for energy sector development (at least for energy exports), even in the absence of a significant domestic climate change agenda, in the face of increasing global competition, growing technological isolation and financial constraints.