1

Energy Strategy 2035: a step forward, two steps back

The Government of Russia approved an updated version of the Energy Strategy until 2035. Representatives of public environmental organizations believe that the document lags behind the new world reality: it lacks sustainability and real mechanisms to stimulate low-carbon development.

 

 The Energy Strategy - 2035 version signed by Russian Prime Minister Mikhail Mishusin  Energy Strategy - 2035 reflects the goals, objectives, key directions and indicators of energy development. The authors of the document acknowledge that the Russian energy sector is exposed to high risks due to “high uncertainty and unpredictability of external conditions and factors.” To meet these challenges, it is proposed to promote “a favorable image of the Russian energy industry” and “an accelerated transition (modernization leap) to a more efficient, flexible and sustainable energy industry.”

However, the vision of a sustainable energy future of the developers of the Strategy is not in line with global trends. The document’s targets are mainly in the oil, gas, coal and electricity sectors. The priorities of the Strategy for the next 15 years include the development of the fuel and energy complex (FEC) and the use of fossil fuels.

 

The approved measures of the Strategy include: support for construction of new oil refineries and production of “hard-to-recover reserves” of oil and reduction of tax burden on the fuel and energy complex. In addition, it is planned to “optimize the spatial location of energy infrastructure, within which oil and gas mineral centers, oil and gas chemical complexes will be formed in Eastern Siberia, the Far East and the Arctic zone, and Russia will become a ‘leading player’ in the markets of the Asia-Pacific region.”

 

A new element of the Energy Strategy is a proposal to move by 2035 from full regulation of heat tariffs to a region-oriented model of an “alternative boiler house.” According to the authors’ idea, this investment mechanism not only will make tariffs flexible, but also give consumers a real opportunity to choose heating supply schemes and methods.

 

Energy Strategy-2035 envisages creation of a national system for monitoring and reporting on greenhouse gas emissions. The document suggests that “structural diversification” is to come: carbon energy will be supplemented by non-carbon, centralized energy supply by decentralized, and export of energy resources by export of Russian technologies, equipment and services. However, there is practically no detailed description of low-carbon measures in the Strategy, and there are no clear low-carbon development goals in the document.

On the eve of signing the Energy Strategy-2035, experts from the Energy Center of the Moscow School of Management “Skolkovo” conducted a study on the prospects for “post-Covid-19” development. According to analysts, the forecast values of growth rates of the Russian economy in the future up to 2024, laid down in the current official documents, are significantly behind the projected emission growth rate. This means that the carbon intensity of the country’s economy will grow, and as will the associated with that risks on the international energy market.

According to analysts, since the Russian oil and gas sector will soon face a crisis of underinvestment in the industry and a decline in production, Russia needs to have a national plan to achieve its low-carbon development goals, including a forecast of emissions dynamics, the composition of measures to reduce them, their cost and sources of financing.

 

“The Russian oil and gas sector has received a strong incentive to think about the prospects for the inevitable restructuring of the industry and how to put hydrocarbons onto the global “green” agenda. Here too, the growing trend of oil and gas decarbonization and customer demand for a carbon footprint can play a special role,” says Tatiana Mitrova, director of the Center for Energy at the Skolkovo Moscow School of Management. “The current situation on the markets has clearly demonstrated that there will be no winners among producers in this situation. Therefore, long-term actions aimed at finding a new model of development of the entire oil and gas sector in the conditions of decarbonization become particularly important.”

 

Representatives of public environmental organizations agree with the experts’ conclusions, and draw attention to the erroneous thesis from Strategy-2035, which states that “Russia’s energy industry is one of the most environmentally friendly (low-carbon) in the world, since more than a third of electricity generation comes from nuclear power, hydropower and other renewable energy sources, and about a half - from natural gas.” 

 

Representatives of the Russian Social and Ecological Union (RSEU) emphasize, that “the Energy Strategy should correspond to the global environmental transition to carbon-free energy by the middle of the 21st century, provide for a speedy avoidance of coal use and in the future reduce dependence on all types of fossil fuels, and should not include an increase in the share of nuclear power plants and large dam hydroelectric power plants in the energy balance of the country.”