“Price on carbon”: what and how much can they start charging businesses for by 2028?

Carbon pricing in one form or another has already been introduced in about 50 countries and is planned in more than 20. The most common carbon pricing mechanisms around the world are a carbon levy, which businesses pay to governments based on their emissions, and a system market trading of carbon credits. The Ministry of Economic Development of the Russian Federation is studying the possibility of charging businesses for greenhouse gas emissions starting in 2028. In this material we have collected the main data regarding the initiative known to date.

The strategy for the socio-economic development of Russia with low greenhouse gas emissions until 2050 was approved by the Government of the Russian Federation in 2021. According to the document, by 2050, net greenhouse gas emissions should decrease by 60% from 2019 levels and by 80% from 1990 levels. It is assumed that the further implementation of this scenario will allow our country to achieve carbon neutrality by 2060.

The Russian Ministry of Economic Development proceeds from a phased and balanced approach to the introduction of a “carbon price”. The funds raised will be used to modernize the economy and develop knowledge-intensive industries.

The preliminary plan, which has yet to be considered by the Government of the Russian Federation, looks like this:

• IV quarter of 2024 - analysis of the tax burden of economic sectors, taking into account an assessment of their current carbon intensity and exposure to the risk of an external carbon price in key export markets.
• III quarter 2025 - development of the concept of “carbon pricing”, including goals, regulatory parameters and sectoral coverage.
• II–IV quarters of 2026 - submission of a draft federal law creating the legal basis for the introduction of a “carbon price” to the Government, and then to the State Duma.
• II quarter of 2027 - creation of infrastructure for the implementation of the mechanism for charging a “carbon price.”

By the end of 2024, it is planned to approve targets for reducing greenhouse gas emissions, including by sector of the economy. The Ministry of Economic Development is already forming criteria for organizations with emissions of 50 thousand tons of CO₂ equivalent, which will be required to submit reports from 2025.

Olga Kalyuzhnaya, President of the Russian Timber Association: “Carbon collection can be considered as an effective measure for implementing the climate strategy only if two key components are clearly defined: the pricing mechanism and the transparent targeted use of the collected funds. From the point of view of the possibilities for the Russian Federation to participate in projects that allow receiving compensation for emissions, it is necessary to understand in which international markets Russian carbon credits will be able to be traded. An important initiative in this direction is the initiative of the State Duma to create a register of carbon units of the BRICS+ countries..