By Anna Korppoo, FNI, and Andrzej Błachowicz, Climate Strategies

As one of the largest contributors to global CO2 emissions, Russia is a crucial player in achieving the Paris Agreement goals. The country’s latest climate pledges ahead of COP26 are however “critically insufficient”. If other governments were to follow a similar path, global warming could become greater than 4°C.  There’s consequently an urgent need to work with Russian policymakers, researchers and civil society to address this ambition gap.

One of our recent initiatives tackled this challenge by examining the Russian coal sector. Convened by Climate Strategies, the consortium involved Russian and international researchers[1], building on perspectives from domestic and international stakeholders.

The Russian coal sector’s outsized global climate impact

While the domestic consumption of coal has barely changed since 2000, Russia is the world’s third largest exporter of coal. Some 60% of coal production was exported in 2018.

Coal extraction in Russia has an immense CO2 footprint. While it only contributed 0.4% to the country’s economy, coal mining and combustion accounted for 21.6% of Russia’s greenhouse gas emissions in 2019. As most coal is being exported and releases emissions elsewhere, the negative climate impact does not stop at Russia’s borders – it is estimated to be equivalent to Australia’s annual gross greenhouse gas emissions.

Yet, a transition away from coal has so far not been seriously considered in the country. The Russian leadership’s conservative vision and the coal sector lobby do not foresee an end to mining. Instead, they encourage expanding coal exports. From their perspective, the Paris Agreement materialises as a disaster for the coal sector.

A managed transition is an economic opportunity for Russia’s coal regions

A coal transition would predominantly affect Russia’s main coal producing regions, especially Kuzbass. Since these regions would have to diversify their economies to avoid loss of revenues and unemployment, a potential coal transition is politically sensitive. However, it would be both socially and economically less risky to have a managed transition away from coal, building on local and global lessons from other transitions. Otherwise, affected regions might face serious economic disruption when international demand for coal starts disappearing.

And this could be sooner rather than later. In fact, a recent report found that the global coal development pipeline has collapsed. As the EU’s planned carbon border adjustment mechanism and the bloc’s coal phase-out plans take shape, Russian coal producers set their hope on Asia. 80% of newly planned coal plants are expected to be in Asia, but the pressure on those nations to consign coal to history is building ahead of COP26. In a further blow to coal, President Xi Jinping recently announced China would no longer fund the construction of new coal-fired power projects abroad.

Outlook: Where do we go from here?

Coal will be part of Russia’s energy export for the foreseeable future – though coal-producing regions increasingly face the economic reality of a world shifting away from coal. What steps can and should policymakers, companies and civil society in Russia take to start diversifying the economies of regions most affected by a potential coal phase-out?

First, the Russian government must finally acknowledge the upcoming global coal transition rather than ignoring and opposing it. Pro-active planning and working on solutions with affected groups and companies could save the Russian coal producing regions, especially Kuzbass, from future economic shocks. In addition, economic diversification would require more regional level planning and practical action. For now, however, the coal sector will continue its activities with the support of subsidies. This is backed by the federal government in order to avoid short-term social unrest.

Reaping these presumed short-term gains might have dire consequences for the affected coal regions. Starting serious dialogue and planning for a coal phase-out can be a triple win: For the coal mine workers who will have time to re-skill. For the Russian coal regions who will seize new economic opportunities. And for the world as emissions from Russian coal will eventually decrease, keeping the hope of achieving the 1.5°C goal alive.

[1] The research was led by Anna Korppoo (Fridtjof Nansen Institute). Contributing researchers included Maxim Maxim Titov and Nikita Lomagin, Energy Policy Research Center at the European University St. Petersburg; George Safanov, Higher School of Economics and Tatiana Lanshina, Russian Presidential Academy of National Economy and Public Administration.