Energy Transition poses significant challenges for Russia

We can now experience the fundamental changes taking place in the life of mankind, which are associated with its transition to the new types of energy. In the last two centuries, fossil hydrocarbons have been the basis of global energy consumption. However, their burning led to the accumulation of such a great amount of carbon dioxide in the atmosphere that it was impossible to ignore the anthropogenic factor as one of the causes of the global warming.

In this context, the expert community began to consider decarbonization as the main way to combat the climate change. There is no definite answer of whether this is the right way, but it is already obvious that the decarbonization process has been launched and will be completed.

At the moment, Russia is one of the largest hydrocarbon energy exporters and, thus, will be affected by the industry transformation to the maximum extent. Given the importance of the oil and gas revenues both for the country’s budget and its economy as a whole, even if some of these risks materialize, it can have significant negative effects that all Russians will feel.

The main energy transition risks for the Russian economy are:

· Decrease of export volumes and prices of traditional (hydrocarbon) energy resources