Russia and Global Security Risks
Green Economic Recovery after the Crisis

Ensuring a green economic recovery from the COVID-19 crisis has become a priority in many countries. In the energy sector, we are seeing an accelerated transition to clean, low-carbon solutions. What will be the choice of the Russian fuel and energy sector? Will the priorities of our energy policy change? Liliana Proskuryakova, deputy head of the Laboratory for Science and Technology Studies at the National Research University Higher School of Economics, writes about this.

The pandemic presents not only a challenge for the economy and society, but also an opportunity to reset, implement or accelerate structural changes.

In the energy sector, qualitative changes were noticeable even before the pandemic. The industry is becoming greener despite opposition from companies and hydrocarbon exporting countries. Many oil and gas majors and national companies have moved beyond their core businesses and are actively investing in renewable energies and other clean technologies. For example, the business diversification of the Norwegian company Statoil led to a radical change of priorities and even a name change (to Equinor) in 2018. A year earlier, DONG Energy in Denmark switched from oil and gas production to the development of offshore wind farms. In 2020, the first delivery of carbon-free hydrogen was supplied by Saudi Aramco (Saudi Arabia) to Japan. The British company BP has adopted a new strategy to move from oil production to supplying low-carbon solutions to consumers.

Not only are companies changing, the energy policies of the largest, most technologically developed countries are changing. South Korea followed Japan's goal of becoming carbon neutral by 2050, and China declared that it would do so by 2060. Despite the US withdrawal from the Paris Agreement, the Federal Energy Commission is considering the possibility of introducing a carbon tax in the country. The European Union has long taken a "green course" and intends not only to increase the capacity of renewable energy generation at a record pace (including the production of "green" hydrogen), but also to strictly control emissions of greenhouse gases (carbon dioxide, methane, etc.). More than a third of the investments allocated for the post-crisis recovery of the EU economy are aimed at pursuing the green initiative and achieving climate neutrality goals by 2050.

Natural gas is considered an acceptable addition to “clean” energy sources. That is why demand for it is growing in many regions of the world, and new technologies (liquefaction) and routes for its delivery are being developed. Fossil fuel certainly remains in the energy balance, but it is also becoming cleaner along the entire production and processing chain.

Many countries, including Russia, are actively analysing technologies for inexpensive hydrogen production, its safe transportation and storage, as well as its use (for example, a mixture of hydrogen and gas in hybrid turbines). An accelerated growth in demand and a fall in the cost of electric and fuel cell vehicles are predicted, and the infrastructure of new filling and charging stations  is actively being developed.
Over the past 10 years, the world has changed a lot: setting aside disputes and doubts about the need to switch to clean energy, the largest countries and companies have moved to actively invest in this area and are striving to gain a foothold in related sectors.

Although scenarios can change and be corrected, the global trends of the last decade suggest that the general course towards sustainable development and eco-thinking still dominates the economy and society. Renewable energy sources will continue to grow at an accelerated pace in the global energy balance, and companies are implementing a transition to technologies that do not have a negative impact on the environment and climate.

Russia is still among the under-performers in this transition. Representatives of government authorities and think tanks are often sure that the country has enough inexpensive fossil energy sources to last it for many years, and should postpone thinking about whether or not to develop renewable energy. There is an opinion that renewable energy generation is expensive and unprofitable in Russia’s cold, cloudy climate. However, it is not. Today, various scenarios for the development of renewable energy in Russia are possible: from maintaining a niche position in this segment of the fuel and energy sectors to becoming one of the drivers of its development. We can say unambiguously that renewable energy generations have great potential and are technically feasible in many Russian regions, and that their use is economically justified.

Clean energy sources are also in demand in Russian society. Many industrial centres are so polluted that it is very difficult to live in them, and people, if possible, tend to move away. Air, soil and water pollution leads to the development of diseases and significantly impairs one’s quality of life. That is why the national "Ecology" project was developed. Much remains to be done in this area.

The current generation of Russians will have to face the challenges of resource mismanagement and climate change. Siberia will suffer, but other regions will also suffer. According to Russian scientists, as a result of climate change, one can expect an increase in the frequency of extreme weather events, a decrease in the number of freshwater fish and the area of ​​arable land; droughts will occur and the permafrost will melt. These changes will entail significant economic losses. If we add a significant decrease in budget revenues from hydrocarbon exports by 2030, which is inevitable in any scenario, it becomes clear that Russia may no longer count on the export of minerals as a growth engine, even in the medium term.
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Opinions


Green technologies in energy, industry and transport have already become priorities for the development of Russia's western and eastern neighbours. For example, the use of electric and hydrogen-powered vehicles, including trucks, is expanding. Several European countries have already established plans to scrap the use of vehicles with internal combustion engines. At the same time (unlike Russia) a large-scale transfer of land transport to natural gas fuel use is not planned. This means that to ensure transport connectivity with  trade and economic partners, and to support tourist flows, it is necessary to develop a new refuelling infrastructure.

Russia faces a difficult task. First, there is a need for a more rational, sustainable (smart) production of goods, a transition to “green” technologies in all sectors, and the introduction of a circular economy. 

These measures are being partly implemented thanks to the transition to best available technologies (BAT), the support of companies in the electric power industry in the framework of Energy.Net, and the gradual digitalisation of all industries, as well as measures to improve energy efficiency. Further progress in this direction is hindered by limited competition, the lack of a strategic vision for the "green growth" of the Russian economy (and relevant strategic planning documents), and unified technological platform solutions.

Second, the culture of resource consumption must change - in companies and in society. In addition to reducing the adverse impact on the environment, the specific consumption of resources reduces the cost of goods and utility costs. These measures are also partly being implemented - the Ministry of Energy is conducting an information and education campaign in the field of energy saving and energy efficiency, and companies are implementing a set of measures to conserve resources within the framework of innovative strategies. At the same time, additional efforts are needed in this direction.

Third, it is necessary to focus research and development efforts on new clean energy solutions. Now in Russia and throughout the world, wind power and photovoltaics dominate: their cost has already dropped significantly and continues to decline, and their efficiency is constantly growing. However, the concentration of resources on two energy sources significantly reduces the likelihood of new ones, including revolutionary solutions (energy of dry rocks, hydrogen energy, etc.). Solutions to support renewable energy sources may include the extension and expansion of the renewable energy supply agreement programme after 2025, and flexible market support tools that use an Energy.Net format, joining the efforts of various authors in the use of technological platforms.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.