Since the beginning of the invasion of Ukraine, the Russian government has submitted to the State Duma of the Russian Federation a package of relevant legislative initiatives as part of the Priority Action Plan to ensure the development of the Russian economy in the face of external sanctions pressure.[1] It provides for the postponement of the entry into force of a number of environmental requirements that are most costly for domestic business, including:

• The deadlines are extended for 2 years when enterprises from the list of 300 largest pollutants must obtain Integrated environmental permits (IEP)[2]
• The terms of installation of automatic emission/discharge control systems are extended for those who have already received comprehensive environmental permits for 2 years
• The timing of the experiment on emission quotas for cities participating in the federal Clean Air project is extended for 2 years (until December 31, 2026), the start date of the experiment is also shifted to 2023. Thus, Russian companies will receive a delay to achieve previously established indicators of emissions of pollutants into the atmosphere, including greenhouse gases.
• The deadlines are adjusted for 2 years according to the norms related to greenhouse gas emissions (in terms of program implementation, reporting, etc.)
• The norms related to the export of forest products are being clarified, as well as the entry of information about it into the Unified State Automated Information System for Wood Accounting.

Under the circumstances, both the Government and business understand that under sanctions, even the most responsible companies are unable to modernize their production assets and equip them with the best technologies to reduce the negative impact on the environment due to problems with the supply of necessary imported equipment or due to the strong impact of sanctions.

This does not mean at all that Russia will cancel the vector of development towards ESG. On the contrary, the current situation is perceived as an opportunity to revise a number of projects that were initially considered ineffective. The problems of climate change have not gone away, which means that the work will continue.

For example, projects for the construction of incinerators will obviously be canceled, since they were based on Japanese and Swiss technologies.

In addition, there will be no need to implement economically expensive solutions for the construction of wind and solar stations, implemented to please foreign investors. Russian companies will be able to concentrate on the introduction of more efficient and affordable Russian-made alternative energy technologies.

Obviously, these changes will affect the climate progress indicators I proposed for Russia in my previous post. Russia will be forced to consume fossil fuels that will not be exported to Europe or other countries. This will happen because coal and oil are now exported in smaller volumes. Therefore, fossil fuels are likely to be used to meet domestic needs. There is no need to talk about a change in the fuel and energy balance of the country towards renewable energy, although Russia has all the necessary technologies for the construction of wind farms and does not depend on technology imports.

The second obvious consequence of the crisis will be the intensification of gasification rates. Russian gas corporations will lose part of their sales markets and will try to increase the share of gas consumption in the domestic market, displacing producers of other energy resources, such as coal.

As for Russian corporations that publish annual reports in the field of sustainable development and climate, their number should not decrease. Despite the fact that most Russian companies have published such reports for foreign investors, over the past several years they have realized the importance of climate change issues and do not plan to reduce their activity in the near future

Summing up, we can say that the emergence of such crises as wars and conflicts negatively affect the health and wellbeing of the planet in general. Some companies are forced to revise their plans for decarbonization, as the deterioration of economic conditions changes the priorities of their activities – from sustainable development to survival. All this affects the fact that we are postponing joint efforts with other countries for tackling climate change problems, and common resources are being redistributed to overcome crises that could have been avoided.

This Post was submitted by Climate Scorecard Russia Country Manager Michael Oshchepkov

 

[1] Federal Law Draft “On Amendments to Certain Legislative Acts of the Russian Federation” No. 2226p-P13 dated March 10, 2022

[2] Integrated environmental permits (IEP) are an official document that allows an economic entity, which includes objects belonging to various categories of environmental hazards, to legally conduct its activities. For government agencies, this document is a guarantee that the company will comply with the established standards for environmental protection