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What is the cost to reduce greenhouse gas emissions?

Average capital costs to reduce greenhouse gas emissions in Russia are on average about 13 U.S. dollars per 1 tonne of CO2 equivalent. The most expensive projects are in metallurgical industry, and the "cheapest" ones are processing of associated gas and energy production based on the CMM utilization.

According to expert assessments, the average specific capital cost of reducing greenhouse gas emissions in Russia are about 13 U.S. dollars per 1 tonne of CO2 equivalent. The most expensive projects are in metallurgical industry, and the "cheapest" ones are processing of associated gas and energy production based on the CMM utilization.

The assessment of the costs for the reductions was performed by Mikhail Yulkin, the head of the working group on climate at the Russian Union of Industrialists and Entrepreneurs, at the request of the Russian Socio-Ecological Union Climate Secretariat. The estimated cost of more than two dozen projects have been correlated with the maximum expected value of annual emission reductions multiplied by the service life of the corresponding equipment. The analysis of the costs for reducing carbon emissions is often a necessary step for project evaluation, it is important for making decisions about selecting the most effective projects to reduce greenhouse gas emissions.

The calculation results showed that the most expensive projects are in metallurgical industry (reduction of CO2 emissions in the steel industry through the introduction of continuous casting machines and new tube mills costs $ 72.03 per tonne of CO2), and most inexpensive ones are energy production based on the CMM utilization and processing associated petroleum gas ($ 2.35 and $ 3.47, respectively). Somewhat more expensive were reductions within the projects of energy production from waste bark and wood ($ 4.45) and of energy efficiency in industry ($ 5.59). The calculations showed high level of economic viability of such areas as energy efficiency and bioenergy.

However, it is important to note that, unlike other economic sectors, high project costs are not always an indication of ineffectiveness of the project. For example, costly efforts to reduce emissions in the steel industry cannot be called inefficient and economically unjustified, because the Russian steel industry ranks second in terms of greenhouse gas emissions after the energy sector and is still one of the most energy-intensive and inefficient industries in the world. Thus, reducing its carbon and energy intensity can considerably improve competitiveness and viability of this sector.

The assessments have shown that the average specific cost of reducing greenhouse gas emissions in Russia is $ 12.98. This cost of carbon reductions is quite low in comparison with other countries: the costs there are in the range from $ 50 to $ 300 per tonne of CO2.

Specific costs for reduction of 1 tonne of greenhouse gas emissions:
Japan ..................... $ 100 – 300
Western Europe ............ $ 65 – 200
Canada .......................... $ 20 – 150
Russia .......................... $ 2 - 70

The currently available calculations and estimates of Russian and international experts prove that reduction of greenhouse gas emissions is economically viable. Reducing emissions is a major strategic tool for modern economy. It not only solves the problem of reducing costs, but also offers a new strategy for controlling activities of enterprises and tools for improving their competitiveness.

With account for considerable excess of the demand for reduction units over their supply in the world market (2.833 billion of carbon units against 1.58 billion), Russia's position can be called extremely profitable. Development of carbon market for our country (joint implementation projects, introduction of internal quotas trading) is a way to bring advanced clean technologies from abroad, and real possibility to create sustainable gross national product due to implementation of measures and standards, introduction of new technologies and renewable energy sources.