How Putin's advisers convinced him to take climate risks seriously

Russia dumps about 5 per cent of all carbon dioxide into the atmosphere each year. PHOTO: REUTERS

MOSCOW (BLOOMBERG) - After years of publicly dismissing climate change President Vladimir Putin is finally prodding officials to take the threat it poses to Russia's economy more seriously.

The shift in thinking means the Kremlin is likely to come to the COP26 climate change summit in Glasgow in November with proposals to synchronise its efforts to measure carbon emissions with those in Europe, according to four people familiar with the plans.

While the moves hardly amount to the kind of ambitious new emissions-reduction target for Russia that western capitals were hoping for, it's a significant step for Putin as the leader of one of the world's largest hydrocarbon producers, who until recently belittled climate issues.

Officials say the new approach is being driven by a belated realisation the European Union, Russia's largest trading partner, is serious about implementing carbon border regulations that will likely compel Russian companies to pay for excess emissions in key industries.

The Kremlin also sees climate issues as among the few areas of possible cooperation with the United States and Europe after years of worsening relations.

Russia's delegation at the summit will focus on topics including standards for calculating CO2 emissions and the absorption capacity of its enormous forests, as well as a proposal to rate nuclear power as "green" energy for carbon accounting purposes, two of the people said.

As the fourth largest greenhouse-gas polluter, Russia dumps about 5 per cent of all carbon dioxide into the atmosphere each year. Nearly 90 per cent of all energy Russia consumes comes from carbon-heavy sources, above the global average of about 80 per cent, and an accelerated deployment of renewables could save the country as much as US$11 billion a year by 2030.

Russia must pursue a strategy that allows it to benefit from reducing carbon emissions, and has a great chance to become a leader in the emerging hydrogen market, Putin told officials on Tuesday (Oct 5) at a televised government meeting. At the same time, it should consider sustainable development of coal, oil and gas to avoid the kind of supply crisis Europe's now experiencing, he said.

At US President Joe Biden's online climate summit in April, Putin stuck to his unambitious emissions targets, leaving Russia as one of the few Group of 20 countries not to aim for net zero.

The base-case scenario of a 2050 carbon strategy the Russian government is preparing assumes an 8.2 per cent increase in emissions over the next three decades and counts on a doubling of the estimated absorption capacity of its forests to more than compensate for the rise.

"Russia is not trying to become the leader of the green agenda," Irina Pominova, head of climate and green energy at the government-backed Centre for Strategic Research, said in an interview in Moscow. "It is rather adapting itself to the global process of energy transition and decarbonisation."

That's still a far cry from two years ago, when Putin mocked efforts to switch to renewable energy by raising concerns about the impact of wind turbines on birds and worms.

In December 2019, despite scientific consensus on humanity's role, he told reporters that "nobody really knows the causes of climate change".

The Kremlin has a lot at stake. Putin built his political power base on reviving post-Soviet Russia as an "energy superpower" and relies on oil and gas sales for 35 per cent of the state budget. Whole regions of the world's biggest country depend on oil and coal production for employment, with few if any alternatives.

While Russia sees huge potential gain from melting Arctic ice that's allowing increased cargo traffic along the Northern Sea Route linking Asia and Europe, the same global warming costs its economy billions of dollars in infrastructure damage each year as thawing permafrost across Siberia puts buildings, roads and pipelines in danger.

Bank of Russia Governor Elvira Nabiullina underlined the threat at an industry conference on Sept 17, saying the regulator had moved from "neutrality" on green issues to pressing financial institutions and companies to take account of climate risks.

Not everyone in Russia's policy circles is on board. While the EU's carbon goal is "ideologically" green, it's unclear if it will significantly impact the climate, said Maxim Medvedkov, Russia's former chief World Trade Organisation negotiator who's now an adviser at the government-backed WTO Expertise Centre in Moscow.

"The EU is deprived of resources - and we are sitting on them," he said. "Is it wise to give up this advantage?"

Russia "needs to put serious measures in place" to compete on the global market for low-carbon goods and services, said Jonathan Elkind, Senior Research Scholar at Columbia University's Centre on Global Energy Policy. "To date, it has not been clear whether the new, climate-friendly statements from Moscow are just rhetoric, or something more serious."

Prime Minister Mikhail Mishustin warned Russia's biggest metals and mining companies that they may face a domestic carbon tax. PHOTO: REUTERS

Russia ratified the 2015 Paris climate agreement two years ago, but took little action until Putin ordered the carbon strategy's development last June. He signed a climate law in July creating a framework for green projects and development of carbon trading.

Prime Minister Mikhail Mishustin warned Russia's biggest metals and mining companies in September that they may face a domestic carbon tax. Putin urged development of solar power stations and green hydrogen as a new fuel at his annual economic forum in Vladivostok last month.

Climate is high on Putin's agenda now, two people close to the Kremlin said. Officials including Mishustin and Sberbank chief Herman Gref played a role in the evolution of his views as Putin saw major companies increase their focus on ESG policies, one of the people said.

At a December 2019 meeting of Putin's civil society council, one adviser, Ivan Zassoursky, warned him that St. Petersburg, the president's home town, is threatened by climate change. Led by Zassoursky, the council's environmental committee urged a "technological transformation" of Russia's economy as part of a new state climate policy in a report this year.

The Kremlin took Biden's appointment of former US Secretary of State John Kerry as his climate envoy as a signal of its growing importance in international policy, the four people said. Putin, who spoke to Kerry during his visit to Moscow in July, responded by naming political heavyweight Anatoly Chubais as his special representative on sustainable development.

While policy is heading in the right direction, Russian authorities view the climate agenda as a way to help defuse political difficulties and "overcome sanctions" by attracting foreign investment, said Vladimir Chuprov, leader of Greenpeace Russia's Energy Programme.

Countries mustn't use the Glasgow talks to try to impose additional costs through carbon regulation "under the slogan of climate", which will only lead to new trade barriers and mutual accusations, Russian Economy Minister Maxim Reshetnikov said.

"We need to overcome the differences that we have."

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