The boss of Rosneft has become the first top executive to petition Russia's President Vladimir Putin for wide-scale government support of his company’s initiatives to reduce carbon emissions.
Moscow business daily Kommersant quoted Igor Sechin, executive chairman of Russia’s largest oil producer, as warning that carbon tax proposals in Europe and the US could “deal a much more severe blow” to the Russian economy than sanctions, introduced against its corporations from 2014.
According to his letter, Russian hydrocarbon exporters to international markets should be exempt from any trans-border carbon taxes because of the high potential of the country's ecosystems, such as forests and swamps, to absorb carbon dioxide.
According to a scenario drafted by the Ministry of Economic Development this month, proposed measures to increase natural CO2 absorption might double the existing national annual capacity to 1.1 billion tonnes by 2050.
A more optimistic scenario envisages that the annual absorption capacity of trees and swamps will grow to 1.5 billion tonnes by 2050 as new trees are planted and dry areas are flooded.
However, in both scenarios, CO2 emissions will actually grow slightly in many segments of the economy by 2050, with electric generation, home heating and gas transportation thought to be the main areas in which they might fall.
Adding to this potential is an option to employ carbon capture and storage solutions at hundreds of exhausted idle fields throughout the country. Sechin estimated their total accumulating capacity at 1.7 trillion tonnes of carbon.
Government plans to tackle emissions are currently based on voluntary principles, with no state funding.
However, in his letter, Sechin told Putin that the authorities should provide “cheap financing” and tax privileges to Rosneft’s climate initiatives, to create fair operating conditions with similar projects in Europe.
Meanwhile, Kommersant quoted ministry officials as saying they expect businesses in Russia to finance their climate projects by attracting cheap financing from abroad.
Experiments to test a low-carbon solution to convert natural gas into hydrogen and methanol that may be an alternative to pyrolysis — with its high energy requirements and CO2 emissions — at testing grounds near Moscow have been funded from the “pockets of their authors”, one researcher told Upstream.
The Russian law on limiting greenhouse gas emissions, passed in early July, calls for companies with estimated annual emissions of 150,000 tonnes of CO2 to begin reporting their actual volume to the authorities from 1 January 2023.
In 2025, the threshold will be lowered to 50,000 tonnes per annum, to expand the scope of reporting companies.
The law establishes a framework for registering the volume of emissions for each company, with the long-term intention of permitting their exchange and trading among participants.
The details of creating terms and implementing the plan are at the discretion of government.