LOW-CARBON DEVELOPMENT STRATEGY: PROSPECTS FOR THE RUSSIAN ECONOMY

As a party to the Paris Agreement Russia pledged not to exceed the net greenhouse gas (GHG) emissions' level of 70-75% to that existed in 1990. Energy efficiency improvement, structural shifts in production and the increase of Russian forests' carbon sink capacity were the key contributors to curbing the GHG emissions in Russia during the last 25 years. The decreasing carbon intensity of the GDP was a natural result of economic growth and implementation of voluntary business projects to improve the efficiency of the industrial sector using investments in modernization of the production facilities. Russia disposes significant potential to reduce GHG emissions, but the feasibility and efficiency of respective measures should be evaluated considering the implications to economic growth. Implementation of the so-called aggressive scenario to halt global temperature growth at any cost within 1.5 degrees C as compared to the pre-industrial era is unacceptable to Russia from socioeconomic perspective given its leading to lowering the average annual GDP growth rate by 1.8 percentage points by 2050. In addition, tough measures to reduce GHG emissions involve energy costs skyrocketing to unprecedented levels - from the current 13% of the GDP to 30% of the GDP by 2040. Such a burden would hardly be compatible with economic growth or, in any case, provide for the economic growth's providing for improvement of the communities' standard of living. Russia needs the long-term development strategy with low GHG emissions level focused on improving the quality of living, modernizing and increasing the competitiveness of the national economy. Such a strategy rests on the following principles: 1) Russia has been the world leader in the GHG emissions reduction since 1990, so no solid reason exists for its soonest switching to excessively stringent climate commitments which result in ungrounded additional restrictions to its socio-economic development pace; 2) The core impediment to sustainable development of Russia is not a high level of the GHG emissions, but economic stagnation. Given that the reasonable scenario of the GHG emissions reduction implies the development path that allows the national economy to grow at a rate of 3% average annual GDP as the least; 3) Action priorities in the area of the GHG sinking should involve improvement of the LULUCF sector potential by promoting sound natural resources management policy and voluntary projects to increase carbon sink and reservoir capacity of the forest and wetland ecosystems; 4) Action priorities to reduce GHG emissions assume the imperative and expediency of economic stimulating of the structural change in the energy sector that involves production and technological chains within the country and do not provide for excessive price growth. Such change includes increasing use of natural gas (as the most "clean" fossil fuel) and nuclear energy (given Russia's leading position in the nuclear technology area), as well as cogeneration of electricity and heat. Pronounced increase in using renewables, energy storage systems and electric vehicles should be acceptable only if production of these is successfully localized and costs are reduced. Sustainable economic growth is a prerequisite for intensifying energy efficiency improvement as it involves modernization of the production facilities and using available and competitive industrial capacities. Specific measures targeted at energy savings will be inefficient given economic stagnation. A reasonable (smart) scenario of the Russia long-term economic development with the low GHG emissions level should comply with the principles above and its driving force propelled by structural and technological modernization of the economy that fully involves economic potential of the energy resource and power sector. The implementation of this development scenario would allow Russia to comply with the Paris Agreement national commitments while ensuring economic growth at the pace not yielding to that of the global average.