November 30, 2021

The VTB Capital” analysts assessed the cost of the climatic plan for the salvation of Russia and the carbon-neutral transition of the national economy. The authors calculated several scenarios and degrees of achieving carbon neutrality (refusing hazardous emissions and their compensation) by 2060. It was President Vladimir Putin, who put such a purpose earlier on.

Reduction of emissions by 25 % by 2060 would cost Russia 43 trillion Roubles (1.3 % of GDP annually), by 50 % - 86.6 trillion Roubles (2.7% of GDP annually), and 100% reduction would cost 479.8 trillion Roubles (15 % of GDP). Thus, the analysts concluded that as time passes, the decarbonization cost of the economy will rise due to inflation.

At the same time, the authors prepared an alternative and less costly option of carbon-neutral transition by 2060. It does not assume complete refusal of emissions and stipulates compensation measures. Such a plan would cost 102.7 trillion Roubles and assumes to focus on garbage utilization, methane emission reduction, electrical power system decarbonization, and some projects in the forestry field. These fields totally generate 59% of the total volume of emissions in Russia.

The authors also note that the decarbonization costs may lead to higher rate inflation. The cost rise in electrical power generation and cement production industry may be most significant (28% and 40% respectively).


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