Carbon regulation and climate economics discussed at SPIEF-2023

Photo: Roscongress, Sergey Kulakov

We continue summing up the results of the St. Petersburg International Economic Forum. Within the framework of SPIEF-2023, several sessions were held dedicated to carbon regulation and the climate economy. We have collected the main theses from the SPIEF:

• Carbon regulation is no longer just a tool for decarbonization - it allows you to manage the external economic risks associated with climate regulation in different countries. Issues of carbon regulation have not left the government agenda, but have become less relevant after the closure of Western financial markets. Domestic regulation in this direction is still at the initial stage of development, the local market of carbon units has not yet been formed. New incentives should be expected from Asia.
• The main problem in the field of decarbonization is the lack of consistency. The legislation in this area still has many gaps, and businesses often find no incentive to invest in ESG in such a difficult environment. However, the companies do not intend to abandon the ESG agenda and low-carbon development.
• At the moment, the Strategy for Social and Economic Development with Low Greenhouse Gas Emissions until 2050 has been approved in Russia, and the law on limiting greenhouse gas emissions has also come into force. Since 2021, a climate experiment has been launched on Sakhalin, and in 2022 the Ministry of Economic Development approved the criteria and procedure for classifying projects as climate projects. Mandatory carbon reporting is introduced for the largest issuers.
• The impetus for the carbon agenda comes from Asian markets, where both investors and counterparties are making their carbon footprint demands. When reorienting the export of Russian raw materials to the east and south, it should be taken into account that in most countries the ESG agenda and low-carbon development are a priority. China, which generates more than a third of the world's carbon dioxide emissions, is taking steps to develop uniform ESG requirements based on current international standards.
• For countries in the Asia-Pacific region (APR), reducing their carbon footprint has become an important topic, with some countries already beginning to implement measures to reduce their carbon footprint. In addition to China, a number of programs are being implemented by India and Japan. The creation of a regional market for the circulation of carbon units in the Asia-Pacific countries will allow regulating the level of emissions and encouraging companies that invest in renewable energy and environmentally friendly technologies. Stimulation of the environment and innovation sector through the regional market for carbon credits will lead to a technological breakthrough and the creation of new jobs.

Olga Kalyuzhnaya, President of the Russian Forest Association: “Currently, the Russian Federation is moving towards the creation of a unified national monitoring system for climate-active substances, including greenhouse gases. To form a national climate monitoring system, it is necessary to provide not only a regulatory, but also an infrastructural base. Investments in current scientific and fundamental innovative climate projects are estimated at 10 billion rubles. This will allow Russia to obtain its own climate model by 2025 both at the national level and on a global scale”.