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Russia’s Prime Minister Urges Country To Prepare For Post-Oil Era

Russia must start getting used to lower oil, gas, and coal use in the future, Prime Minister Mikhail Mishustin told Russian media, adding that the government will approve a plan for adjusting Russia's economy to the global energy transition by the end of the year, TASS has reported.

"The world economy is aimed at a gradual transition to low-carbon energy, and this is already a new reality. It is necessary to prepare for a step-by-step reduction in the use of traditional fuels: oil, gas, coal. [It is necessary] to improve energy efficiency, develop alternative energy, build appropriate infrastructure," the Russian prime minister said.

"What will be done this year? First of all, this is a long-term forecast until 2050. This is the basis for development and decision-making. It includes such parameters as energy balance, carbon balance, macroeconomic parameters, GDP growth rates, trade parameters, investments, growth of real incomes of the population, etc. This [will be] an assessment of our opportunities and risks. The main parameters of the forecast should be developed by October 1," the official explained.

Oil and gas are major export revenue contributors to Moscow's budget. Russia is a major gas supplier to China and Europe, and exports oil all over the world, last month becoming the second-largest oil supplier to none other than the United States.

However, even in Russia, decision-makers are beginning to sense the change in political priorities elsewhere, the reason being this change in priorities has the potential to seriously affect Russia.

Last month, Rosneft president Igor Sechin warned that the carbon border tax the EU has introduced to level the playing field for its heavy industries could do Russia more harm than sanctions. At the same time, Russia has the world's largest carbon sink in Siberia forests and wants to capitalize on that by having it recognized. Over the longer term, however, if energy shift forecasts are correct, the country would need to adjust to much lower oil—and maybe gas—demand on a global level.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on September 21 2021 said:
    It has become trendy nowadays for everyone in a position of responsibility to prepare his/her country’s economy for lower use of fossil fuels as part of global energy transition. The Russian Prime Minister’s statement is no exception. This is no more than a sop to the environmental lobby.

    However, if those who parrot such calls think about it, it isn’t in their power to do that. Energy transition is not dictated by law, it is the global economy that determines the transition because it is the only power on earth to decide how much fossil fuels it needs to keep running and this means well into the future.

    In the case of Russia, there are many vital and strategic considerations why energy transition is not coming soon or ever.

    The first is that Russia’s emissions’ footprint is the least among the world’s major economic blocs. Coal which is the worst offender only accounts for 12% of Russia’s primary energy consumption according to the 2021 BP Statistical Review of World Energy compared with 58% for China, 15% for the EU and 14% for the United States. Oil accounts for 21% of Russian primary energy consumption compared with 40% for the US, 36% for the EU and 20% for China. Natural gas which is the least pollutant accounts for 54% compared with 31% for the US, 23% for the EU and 7% for China. Nuclear energy accounts for 6% compared with 10% for the EU, 9% for the US and 3% for China.

    The second consideration is that Russia’s untapped reserves of oil and gas at the Arctic are estimated at 125 billion barrels (bb) and 3004-3534 trillion cubic feet (tcf) of gas. If these are added to Russia’s current proven reserves of oil and gas, the figures then mushroom to 233 bb of oil and 4324-4854 tcf lasting from 1-2 centuries.

    The obvious conclusion is that Russia doesn’t need energy transition as badly as the other economic blocs. Moreover, Russia has the world's largest carbon sink in Siberia forests.

    It is most probable that the very last barrels of oil produced will come from Iraq, Venezuela and the Russian Arctic.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Lee James on September 22 2021 said:
    I guess I did not see this Russian position on carbon pollution and transition away from burning carbon coming. Mostly, I have seen denial about the need to limit use of fossil fuels, from Russia. There's an obvious bias toward business as usual.

    Kind of amazing that Russia is paying such close attention to the EU carbon border adjustment tax. But, the huge carbon sink in Siberian forests . . . is burning .

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