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LOW-CARBON DEVELOPMENT: CHALLENGES FOR RUSSIA

O. V. Kudryavtseva, A. V. Baraboshkina

Abstract

Low-carbon development is an inevitable choice to solve environmental problems and achieve sustainability. The European Union set a goal to become carbon neutral by 2050 and then proposed a Carbon Border Adjustment Mechanism (CBAM) to tackle carbon leakage and enhance the effectiveness of European climate policies. The EU is Russia`s largest trading partner, so this mechanism could potentially have a significant impact on the Russian exporters of fossil fuels and carbon-intensive products and the country`s economy. The paper examines carbon dioxide emissions embodied in Russia`s trade in comparison with other major economies using the input–output analysis framework. To assess the carbon intensity of exports we use CO2 emissions embodied in exports and the value of goods exports. This allows us to define the position of Russia among other countries and assume what challenges Russia may face because of the implementation of the CBAM. Results show that Russia is the second largest net exporter of CO2 emissions following China. Its exports are characterized by higher carbon intensity compared with other leading economies. The high level of carbon dioxide emissions embodied in the national exports is determined by its structure with the high share of raw materials and the country`s rather carbon-inefficient technologies. Therefore, the Carbon Border Adjustment Mechanism could have a serious negative impact on the national economy as well as specific industries, reduce the competitiveness of Russian goods in the European market. On the other hand, it could stimulate the diversification of Russia`s economy and its switch to high-technology exports in the long term. The framework may serve to identify the role of international trade in the context of decarbonization. Further analysis should be followed by the calculation of Russian carbon-intensive industries` carbon footprint and the development of address measures to reduce it. This is crucial for elaborating complex emissions management policy based on low-carbon economy principles.

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DOI resolver: doi.org/10.5593/sgem2021/5.1/s20.038

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