IMF calls on Russia to acknowledge dangers of climate change

The IMF wants Russia’s business and political elite not to underestimate the challenges the global green energy transition will present for the country, says The Moscow Times citing the fund’s Managing Director Kristalina Georgieva. Speaking at the St Petersburg International Economic Forum (SPIEF), she warned Russia’s key economic policymakers about “a very significant structural transformation related to the world finally getting serious about the global climate crisis”. According to the IMF, some 23% of global emissions will be covered by carbon pricing this year. “We still have a long way to go, but during the pandemic, many jurisdictions moved to taxing or pricing carbon.”

Georgieva noted that Russia “might be underestimating the significance of what is going on”. According to a poll of the forum’s attendees, only 4% of them see the global energy transition as the biggest challenge facing the Russian economy coming out of the coronavirus pandemic. However, the current state of affairs should be a concern “for an economy that has a significant fossil fuel component”, believes the IMF’s representative, as many advanced economies have put massive support for renewable energy and the green transition at the heart of their post-pandemic economic recovery packages.

In the near future, both the EU and US are going to introduce carbon border tax, which is a levy charged on businesses based on the emissions produced in the products they import. The Central Bank calculated that the EU’s carbon border tax alone could affect more than 40% of Russian exports. Critics and environmentalists accuse Russia of being slow to acknowledge the dangers of climate change and consider that the country has not caught on to how fast economies around the world are starting to address the problem.

President of the World Bank David Malpass also urged Russia to advance its efforts to address climate change in his address to SPIEF. “For Russia, it will be important to achieve dramatic improvements in energy efficiency, reduced use of coal, manufacturing that is less carbon-intensive, and land-use practices that improve the efficiency of fertilizer and reduce the pollution of rivers and oceans,” he said. Both the World Bank and IMF believe that the green energy transition is an opportunity for Russia to create a new competitive, domestic industry, which can eventually replace the country’s heavyweight fossil fuel majors. Georgieva mentioned Russia’s huge opportunity in hydrogen that should not be missed, while Malpass highlighted the country’s “strengths in science and engineering”.

Meanwhile, Minister of Economic Development of Russia Maxim Reshetnikov considers the EU’s plans to introduce a carbon border tax “a little bit protectionist”. He reminded the SPIEF audience that the climate agenda was only one of 17 global sustainability targets and pointed out that Russia also had the objective of fighting poverty.