With carbon neutrality dealing a potential blow to its status as one of the world's major energy powers, Russia could maintain its export revenues by getting ahead of the curve and leading a global transition to green technology.
That's according to a report released on Wednesday by the World Bank analyzing how the world's largest country will fare in a world less reliant on fossil fuels. As a major producer of oil and gas, it concluded, Russia will be heavily affected by increased demand for renewable energy. However, according to the bank's analysts, Russia is in a better place to manage the transition than other large exporters, largely thanks to a more diversified economy and developed infrastructure.
"Environmental sustainability is becoming central to the global economic agenda. Increased commitments by countries and firms to carbon neutrality signal that wholesale changes to policy frameworks will be needed in the coming years," said Renaud Seligmann, the World Bank's country director for Russia. "With Russia's pledge to become carbon neutral by 2060, the country now needs to take concrete actions of moving towards decarbonization."
The World Bank emphasized that the best strategy for Russia is cooperating on climate action with other countries. According to their analysis, Russia's GDP could fall by 4.6% by 2050 if officials don't make changes, compared to only 0.9% if they take part in a global plan to agree a minimum price for carbon-based fuels, encouraging other nations to invest in alternatives.
In July, Russian President Vladimir Putin told US climate envoy John Kerry that the two nations must work together to slash emissions and protect the planet. In a call, the Russian leader said that Washington and Moscow have "common interests" when it comes to global warming. However, Russia has come under fire for its plan to achieve carbon neutrality by 2060, ten years later than many other nations. Putin has insisted that the transition will go ahead, but that it needs to be done with moderation.
Earlier this week, the Kremlin announced a project to assess whether existing gas pipelines could be used to transport "green" hydrogen, a possible major source of renewable energy for the future. If successful, the plan would allow Russia to export hydrogen without needing to construct new infrastructure.
According to the World Bank forecast, Russia's economy is expected to grow by 4.3% in 2021, thanks to a rebound in the first half of the year, but the Bank predicted a fall in growth over the next two years. "With vaccination rates still low, COVID-19 control measures may be called for next year, which will weigh significantly on growth," the analysts said.