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Climate Change: Big Challenges for the Global Economy

Climate Change: Big Challenges for the Global Economy

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Participants of the discussion ‘Trading in Allowances for GhG Emissions at Sub-national Level: Ways to Use International Best Practices in Russia’ analysed how the emissions trading system will work and what place nuclear power will occupy in the carbon-free world. The event was held as part of the session ‘Problems of Decarbonization of the World Economy’ of the XXIII Yasin (April) International Academic Conference.

Igor Makarov, session chair, Head of the School of World Economy at the Faculty of World Economy and International Affairs, opened the dialogue, noting that over the past two years, decarbonization has unquestionably been one of the priorities of Russian economic development. He added that recently, an intergovernmental group of experts presented a regular report on the economics of climate change and reducing greenhouse gas emissions.

Igor Makarov
Valdai Discussion Club

The conclusions of the report reflect the amount of scientific knowledge that has been accumulated in recent years: ‘Nevertheless, it includes important theses in a fairly concise form. One of them states that if we want to keep temperature growth on the planet to a level of no more than 1.5 degrees Celsius compared to the pre-industrial period, this means that in the next decade, we’ll need to emit no more greenhouse gases than we have in the current decade.’ In other words, the challenges for the global economy are huge, and it is clear that society will have to face these challenges, he adds.

In November 2021, Russia adopted a strategy of social and economic development with a low level of greenhouse gas emissions until 2050. It aims to reduce greenhouse gas emissions by 80% by 2050 compared to 1990 levels and to focus on achieving carbon neutrality of the Russian economy by 2060. A particular focus in achieving these goals involves dedicated measures for the economic regulation of greenhouse gas emissions, says Igor Makarov.

Ilya Stepanov, Research Fellow at the Centre for Comprehensive European and International Studies of the Faculty of World Economy and International Affairs, believes that economic regulation of greenhouse gas emissions, including using the emissions trading system (ETS), is becoming an increasingly common element of the climate policy of different countries and regions every year. He adds that Russia can apply international experience of permit trading for greenhouse gas emissions at the regional level.

Ilya Stepanov
HSE University

‘The popularity of the emissions trading system as a tool for regulating greenhouse gas emissions (in 2019, 8 new systems were launched across the world) grows due to the effectiveness of the integrated economic mechanism,’ says Ilya Stepanov. ‘The application of ETS gives companies the opportunity to choose the most affordable ways to reduce emissions, including purchasing permits from other companies, which reduce emissions for a cheaper price.’

Stapanov adds that today, there are 27 carbon regulation systems in the world at regional levels. Twenty of them operate in the form of ETS, and the other seven take the form of a carbon tax. Another 13 regions are planning to launch a carbon regulation system in the near future.

‘One of these systems will be ETS in the Sakhalin region. It will contribute to achieving carbon neutrality in the region by 2025. The Sakhalin ETS is intended to become a platform for testing the permit-trading mechanism for further expanding the project at the national level and in other Russian regions,’ he adds.

Ilya Stepanov notes that the implementation of the project is aimed at identifying opportunities for applying international experience in the regional regulation of greenhouse gas emissions in Russia, in particular within the framework of the emerging Sakhalin ETS.

Svetlana Vanina, visiting lecturer at the HSE Faculty of World Economy and International Affairs, spoke about the role of hydrogen-nuclear energy in the context of the modern climate agenda. She says that amid forecasts involving the transformation of the global energy balance and an increase in the share of renewable energy sources up to 30% by 2050, nuclear energy retains a stable position as a ‘clean’ primary source for a wide range of synthetic energy carriers. ‘Additional prospects for nuclear energy are determined by its ability to flexibly integrate into power systems of various scales,’ says Svetlana Vanina. In other words, nuclear energy can play an important role in the world community’s transition to green energy. For example, one advantage of the nuclear industry is that a controlled nuclear reaction is currently the only industrially utilised technology that allows humanity to provide energy for many years to come.

Representatives of the Institute of Economic and lndustrial Engineering of the RAS Siberian Branch, NOVATEK, King Abdullah Petroleum Studies and Research Center (Saudi Arabia) also took part in the discussion.

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