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Climate change

Russia is currently working on the formation of a system for enterprises to monitor and report on greenhouse gas emissions, to develop a model for effective state regulation in this area. A draft law on state regulation of emissions is being developed (currently at the stage of interdepartmental agreement). The adoption of this law is planned in 2019. At the same time, fees can be introduced for greenhouse gas emissions, and maybe a mechanism for emission trading. These mechanisms require detailed elaboration, so as not to cause negative economic consequences because of additional impacts on businesses.

The largest share of greenhouse gas emissions in Russia comes from the energy sector. One of the means of increasing energy efficiency is the development of renewable energy. In Russia, hydropower traditionally has a high share in electricity generation (approximately 20 per cent), but generation based on other renewable sources (solar power, wind power, etc.) is still at the development stage, and amounts to approximately 1.5 per cent of the total generation.

The problem of insufficiency of renewable energy development is recognised by the government and is noted in the Energy Strategy; however, one of the problems in the development of renewable energy is that its use in Russia is not always economically justified (because Russia has huge hydrocarbon reserves, whose use is economically more profitable). Therefore, the development of renewable energy is not a priority for Russian energy policy.

According to the current Energy Strategy of Russia, the production of electricity based on renewable energy systems (RES) (except for hydropower with a capacity of more than 25MW) should account for about 7 per cent of the total generation until 2030. In the draft of the new Energy Strategy up to 2035, the statistics are significantly lower.

The support mechanisms only apply to RES with an installed generating capacity of not more than 25MW, and certain measures only apply to certain categories of RES. The main mechanisms for supporting RES in Russia are:

  1. subsidies from the federal budget that compensate for the cost of technological connection to the energy system;
  2. competitive selection of investment projects for the construction of generating facilities operating based on RES and the conclusion of contracts for the supply of capacity to the wholesale market in relation to selected projects;
  3. obligations of grid organisations on priority purchase of energy from RES to compensate for their technological losses during transmission on the retail electricity market; and
  4. a system of 'green' certificates confirming the production and sale of electricity from RES.