Decarbonisation prospects for the Russian economy

. The problems of reducing the emission of gases harmful to nature into the Earth's atmosphere remain relevant. One of the important areas of environmental activity is the decarbonisation of the economy, the consistent regulation of carbon dioxide emissions. At the same time, the process goes beyond the scope of ecological and economic activity, acquiring a geo-economic and geopolitical character. The article considers the sectoral features of carbon regulation in Russia, assesses the vectors of the impact of decarbonisation on individual industries, and determines the scale of influence. An assessment of the dynamics of selected industries was carried out. The case of one of the regions shows the potential impact of the European carbon regulation in the horizon until 2023.


Introduction
The approach of continuous improvement of well-being (and increasing consumption of natural resources) is being replaced by the understanding that the needs and requirements of humanity must be met "without causing damage to the ecosystem and future generations." In particular, reducing the carbon footprint is becoming one of the key tasks of modern society; the need to implement decarbonization programs at various levels of the economic system determines new features of the functioning of individual enterprises and entire industries. In this regard, the purpose of the article is to identify the nature of the impact of decarbonization processes on key sectors of the Russian economy.
The topic of decarbonization is currently being actively discussed in the scientific community. A. Chima-Fox, B. LaPerla, D. Turkington explore decarbonization, the factors of this process, as well as the impact on the ecology and economy of the countries of the world [1,2]. At the same time, decarbonization does not directly affect the generally accepted indicators of the quality of human life, which makes it difficult to promote it in practice [3,4]. J. Seraphim studies the risks and opportunities arising from the implementation of a policy to reduce the carbon footprint [5]. M. M. Miralles-Quiros and J. L. Miralles-Quiros identified the goals of decarbonization and the need for the business community to participate in their achievement [6]. G. Luderer, M. Pel, A. Arvesen studied various decarbonization strategies and their impact on the industrial development of countries [7].

Materials and methods
The methodological basis of the study was made up of data from the European Commission, the Yu. A. Israel Institute for Global Climate and Ecology, and the Federal State Statistics Service (Rosstat). In order to identify the impact of decarbonization processes on the sectors of the Russian economy, an analysis was made of generalized revenue indicators for the relevant industries.
At the global level, the latest (published in May 2021), conceptual scenario for the decarbonisation of the global economy is the Strategic Plan of the International Energy Agency "Net Zero by 2050 -A Roadmap for the Global Energy Sector" (IEA, 2021), abbreviated as NZE or Net Zero 2050. This comprehensive document provides a roadmap to move towards a zero energy system by 2050, while ensuring stable and affordable energy supplies, ensuring universal access to energy and ensuring sustainable economic growth. The strategy offers a cost-effective and economically productive path leading to a clean, dynamic and sustainable energy economy dominated by renewable energy sources. Thus, at the end of 2019, the European Union presented a comprehensive legislative initiative EU Green Deal, the goal of which is to achieve climate neutrality of the EU by 2050. And in June 2021, the European Council adopted the "Climate Law", which made carbon neutrality by 2050 legally binding on all EU countries. In parallel, the Climate Target Plan until 2030 was tightened, the main goal of which is to reduce emissions by at least 55% compared to 1990 levels (instead of the original goal of reducing by 40% compared to 1990). Thus, over the next 10 years, the EU will have to reduce emissions more than the sum of the past 30 years.
At the end of 2019, the European Union presented a comprehensive legislative initiative EU Green Deal, the goal of which is to achieve climate neutrality of the EU by 2050. And in June 2021, the European Council adopted the "Climate Law", which made carbon neutrality by 2050 legally binding on all EU countries. In parallel, the Climate Target Plan until 2030 was tightened, the main goal of which is to reduce emissions by at least 55% compared to 1990 levels (instead of the original goal of reducing by 40% compared to 1990). Thus, over the next 10 years, the EU will have to reduce emissions more than the sum of the past 30 years.
With the proposal presented in mid-July 2021 by the European Commission for the introduction of a cross-border carbon regulation mechanism (CBAM) by the European Union, carbon tax has become a reality of the future. Oil refining is currently excluded from the spectrum of the carbon tax: the tax at the first stage will affect metallurgy, gas chemistry, and cement production.
Initially, CBAM will apply to a limited set of commodities (among others, cement, nitrogen fertilizers and their raw materials, iron, steel and aluminum and their products, and electricity) [5]. Steel, cement, and chemicals are among the top three emitting industries and, due to technical factors, are among the most difficult to decarburize. Key technical and economic factors include high thermal and process carbon dioxide emissions, low profitability, high capital intensity, long asset lives and the impact of trade.
At the same time, the process of decarbonisation of the world economy and its consequences for the Russian Federation must be considered in a complex of vectors of influence, both negative and positive. Identification of the leading sectors of the Russian economy makes it possible to assess the complex impact of the decarbonisation process and determine not only losses and threats, but also development opportunities within the framework of this international process.
To identify the key industries that will be most affected by the decarbonisation of the global economy, consider: -all areas of economic activity that are intensive in terms of carbon emissions; -all industries whose products are included and are predicted to be included in the IAMS and other climate restrictive regulations of the partner countries that affect the foreign trade of the Russian Federation; -the main industries that contribute to minimizing greenhouse gas emissions.

Vectors of the impact of decarbonisation on the Russian economy sectors
According to the National report on the inventory of anthropogenic emissions, the structure of emissions by sector in Russia has remained relatively stable over the past decades. The power industry is the main contributor to Russian carbon emissions: in 2019, 720 million tons of CO2 equivalent were emitted into the atmosphere during the production of electricity and heat. The oil and gas industry, including transport, is 298 million tons of CO2 equivalent, the coal industry is 68 million tons, and the petrochemical industry is 50 million tons. Together, these activities emit 54% of all greenhouse gas emissions in Russia.
The total emissions of air pollutants from mobile sources in Russia in 2019 amounted to 5.4 million tons. Mobile sources in Russia can be divided into two large groups: road and rail transport. The share of pollutants from road transport amounted to 97.3% of the total emissions in the country in 2019. The dynamics of air pollutant emissions from stationary sources is closely related to the development of the country's industrial sector. In 2019, industrial production showed an increase of 2.3%, while emissions from stationary sources grew by 1.3%.
When assessed by industry, the largest emissions of pollutants into the atmosphere from stationary sources fall (in descending order) on metallurgical production, the provision of electricity, gas and steam, the extraction of crude oil and natural gas, and coal mining.
Among the sectors of the Russian Federation, the development of which contributes to minimizing greenhouse gas emissions, we should highlight: -Renewable and hydrogen energy.
-Mechanical engineering and metalworking.
-Construction and repair, maintenance of buildings.
-Collection, recycling and disposal of waste (including CO2 capture).
-Forestry, logging and production of wood materials.
-High-tech industries that contribute to digitalization and decarbonisation. Industries such as mechanical engineering and metalworking, construction and repair, building maintenance, forestry and logging, the process of decarbonisation of the world economy has not only a positive, but also an indirect negative impact. However, the positive influence dominates.
The development of the oil and gas and coal industries entails an increase in the production of fossil fuels, an increase in the burden on the environment, which negatively affects the implementation of programs to achieve zero emissions.
The electric and thermal power complex (power plants operating on coal, natural gas) is also one of the links in the chain of carbon dioxide emissions into the atmosphere. In this connection, the complete or partial replacement of thermal power plants with renewable (HPP, WPP, SPP), hydrogen or nuclear energy facilities will positively affect decarbonisation processes in the region, country and world.
Ferrous and non-ferrous metallurgy enterprises, along with chemical production, are by far one of the most significant sources of CO2 emissions. Outdated equipment (roasting and smelting furnaces, converters) seriously reduces the effectiveness of any carbon management measures.
The transport sector (cars, planes, ships, trains) can also be characterized as a significant source of greenhouse gases. Reducing emissions from transport plays a critical role in combating climate change.
Agriculture today is both a victim and one of the causes of climate change. On the one hand, the greenhouse effect of the agro-complex is formed through the use of chemical fertilizers, pesticides and animal waste. This effect continues to grow due to the everincreasing demand for products. On the other hand, climate change and global warming are affecting the sustainability of crop and livestock systems.
The pulp and paper industry also has a negative impact on the decarbonisation process. Atmospheric pollution with carbon, sulfur and nitrogen oxides often causes the formation of smog.
The production of glass and glass products is carried out at high temperatures and requires the use of a significant amount of energy, which leads to the emission of combustion by-products (sulfur dioxide, carbon dioxide and nitrogen oxides) into the atmosphere, as well as high-temperature oxidation of atmospheric nitrogen.
The positive effect of reducing the carbon footprint is created by the forestry industry (planting trees, preserving existing forest areas for carbon dioxide consumption and oxygen production), collection, processing and disposal of waste (including CO2).
The development of mechanical engineering and instrumentation also contributes to the spread of decarbonisation processes for the development and implementation of enterprises and in everyday use of machines / facilities equipped with cleaning tools that operate on alternative energy sources. New approaches to construction (green building) today allow reducing greenhouse gas emissions and conserving natural resources. This approach and its dissemination contributes to the achievement of the goals of decarbonisation. Table 1 shows the dynamics of the total revenue of large and medium-sized enterprises in the leading industries of the Russian Federation in 2018-2021, which will be most affected by the process of decarbonisation of the global economy. Source: Rosstat Comparison of the total revenue of the evaluated industries with a multidirectional influence vector leads to the conclusion that the total revenue of industries with a negative impact vector is significantly higher than the revenue with a positive impact vector. Let us further consider the dynamics of the revenue of the groups of assessed industries with negative and positive vectors of influence and the share of revenue in the total volume by the assessed industries in 2018-2021. Source: Rosstat The study of the growth rates of the selected key industries in dynamics makes it possible to identify potential development opportunities in the current conditions of decarbonization of the world economy. The growth rates of the industries most sensitive to the decarbonization process are estimated based on revenue data for the relevant OKVED for 2018-2021. (table 3).

Assessment of the impact of decarbonisation on the Russian economy sectors
In 2021, with the impact of the covid-19 pandemic and the restrictions associated with it declining, most industries experienced growth rates above 20% in monetary terms. The most significant increase was noted in the following areas: -oil and gas industry (56.3% in 2021 compared to 2020); -coal industry (97.8% in 2021 compared to 2020); -ferrous metallurgy (69.9% in 2021 compared to 2020); -production of chemicals (51.1% in 2021 compared to 2020); -collection, processing and disposal of waste (including CO2 capture) (70.6% in 2021 compared to 2020); -forestry, logging and production of wood materials (53.6% in 2021 compared to 2020) As can be seen from the list, high growth rates in 2021 are mainly demonstrated by industries with a negative impact vector of decarbonization. The development of positively directed industries does not yet make it possible to compensate for the negative impact of the global decarbonization process on such key sectors of the Russian economy as the oil and gas industry, electricity and heat power, metallurgy, transport, but a significant increase in forestry and waste collection and processing industries makes it possible to identify and use opportunities for economic growth in the future. In general, industries with a negative vector of influence in 2021 showed positive dynamics in growth rates, and industries with a positive vector of influence also showed positive dynamics. In 2021, industries with a negative impact vector had a 41% increase in total revenue, while industries with a positive impact vector increased revenue by 2% due to the global decarbonization process.
In the long term, experts disagree on the negative impact of the global decarbonization process, which is currently manifested in the EU's Transboundary Carbon Management Mechanism (CBAM). According to Sberbank's calculations, the Russian budget could lose 5 trillion rubles. oil and gas revenues by 2035, the potential damage to GDP compared to the inertial scenario will be 7.7% by that time.
In addition, it is advisable in the medium term to focus on finding measures aimed at obtaining a positive effect from the process of decarbonization of the economy in engineering and metalworking. Mechanical engineering and metalworking among the industries experiencing a predominantly positive vector of influence of the process of decarbonization of the economy, is the first in terms of the absolute size of the industry. In order to minimize the negative impact on the Russian economy of the global decarbonization process, the following should be considered: -Development of the market for electrolyzers -equipment for the production of hydrogen from water.
-Development of the market for equipment for capturing and storing CO2.
-Development of the equipment market for RES.
-Development of the heat pump market.
-Development of the market for machinery and equipment for renewable energy sources and alternative energy sources.
-Development of the market for equipment for accumulation and storage of energy.
-Development of the market for machines and equipment operating on renewable energy sources and low-carbon fuels.
-Development of the market for electric vehicles and hybrid vehicles

Regional aspects of decarbonisation
The free allocation mechanism still continues to be applied in EU ETS countries to prevent so-called emission leakage, i.e. situations where companies move their production facilities to countries with less stringent emission restrictions, as a result of which global emissions do not changing or even growing. Also within the EU ETS, free allowances can be provided to reward players who have significantly reduced their emissions. Free allowances amounted to about 43% of the total EU ETS emission allowances in 2013-2020.
To make the reduction project legal, a set of current standards developed by organizations, including from the UK, Switzerland and the USA, are used (Plan Vivo, Gold Standard, American Carbon Registry, Climate Action Reserve, Verified Carbon Standard Program, Voluntary Carbon Standard) The price of a CBAM certificate is expected to be pegged to last week's average price of an emission reduction unit in the European carbon market (EU ETS), which is currently around €50-55 per tonne of CO2e reductions. At the same time, the price is set as a result of bidding, and has recently increased from 23 euros to 65, and by 2030 it is projected at 130 euros per ton. Unlike regular reduction units, the certificates will not be tradable and will go into the EU's general budget.
From 2023, exporters of steel, aluminum, pipes, electricity, cement and fertilizers will need certificates, the list will gradually expand up to 100% coverage of all goods imported into the EU.
Moreover, according to the EU authorities, in the future CBAM will cover both direct emissions -those that are emitted and consumed directly in the production process, including emissions from heat and cold production -and indirect emissions, such as consumed electricity. At the same time, for products belonging to the category "complex goods" (goods that require the inclusion of other simple goods in the production process), the carbon footprint of the consumed raw materials and materials is added.
A special body (CBAM Authority) will be created, which will regulate the mechanism for collecting carbon payments by issuing certificates. EU importers of goods will be required to purchase a certificate corresponding to the GHG price that would have to be paid if the goods were produced in accordance with the EU GHG regulation. Import of goods will be possible only by the declarant, authorized by the CBAM body and meeting certain requirements. For example, the requirement that the declarant does not violate customs and tax laws for five years before applying for authorization. In order to import goods subject to CBAM into the EU, importers must declare by May 31 of each year the number of goods imported in the previous year and their associated emissions.
Potentially, these processes can also affect the economy of each Russian region. Consider this on the example of the Chelyabinsk region. From now on, and under the need to purchase certificates from 2023, the largest exporters of steel and pipes from the Chelyabinsk region to the EU -MMK, Mechel, ChTPZ, as well as other exporters of the indicated groups of goods, fall under monitoring from now on and under the need to purchase certificates. Further, this may become relevant for all exporting companies (including because systems like CBAM can be implemented in other countries).
However, major losses are not expected. There will be no direct budget losses, the companies themselves will suffer losses that can be estimated at $79.6 million annually (by 2030, if the structure and volumes of exports remain the same) (see Table 1). It should be taken into account that the total export from the Chelyabinsk region to the EU countries today is less than 10% of the total export, and tends to decrease. Table 3. Potential losses of Russian companies and companies of one of the Russian regions from the introduction of a "carbon tax". Source: Authors calculations In addition, if the Russian legislator decides to introduce a "carbon tax" on the emissions of domestic companies in order to comply with EU requirements, then a comparable amount may go to the consolidated budget of the Russian Federation, and, in particular, may be sent to the regional one.

Conclusion
The development of these areas in mechanical engineering and metalworking will not only offset the decline in the consumption of machinery and equipment based on fossil fuels, but also create a technical basis for the development of other areas, such as renewable energy, CO2 capture, waste processing, hydrogen energy, etc. The development of these areas in mechanical engineering and metalworking requires additional state support and funding within the framework of strategies and target programs, since today strategies aimed directly at mechanical engineering and metalworking are not being implemented as part of the economy decarbonisation strategy.
In modern conditions, the issues of carbon regulation acquire geopolitical overtones, even with the preservation of good initial goals, the formation of new regulatory, inherently protective mechanisms cannot be perceived positively by the recipient countries. In order to successfully move towards reducing carbon emissions in industry, a concerted approach based on mutual trust is needed [10]. This study can be continued towards the development of such an approach, taking into account the balance of interests of both the quality of human life and the ESG agenda.