MOSCOW, December 21. /TASS/. The vulnerability of the Russian economy to transitional climate risks may increase amid sanctions, according to the report of the Bank of Russia published on Wednesday.
"The Russian economy's vulnerability to transitional climate risks may increase over time for a variety of reasons. First, sanctions may cause a shift to outdated technology, which runs counter to the goals of energy efficiency and decarbonization. Second, reorienting exports may necessitate the use of new foreign technology and unfriendly countries formerly accounted for 50-70% of all component and equipment imports. Third, most new "green" technologies are also foreign, and this, combined with the departure of a number of foreign enterprises from the Russian market, would limit the prospects for economic decarbonization," the report noted.
As a result, the Russian economy, according to the Bank of Russia, may exhaust the current raw material export model in the long run, increasing the lag in technological progress.
At the same time, short-term transition risks for Russia linked with the implementation of EU cross-border carbon regulation in the mid-2020s are diminishing in the face of sanctions limitations and a reorientation of exports to Asian countries with less aggressive climate agendas, the regulator noted. "To sustain Russian exports' competitiveness in the medium term, however, their carbon impact must be reduced. Otherwise, Russian exporters will experience a larger drop in revenue, and their creditors will face a decline in credit quality," the report said.
The Bank of Russia also noted that some countries are focused on abandoning Russian energy resources in the short term instead of moving to a low-carbon economy. "In the face of rising geopolitical threats in unfriendly countries, the task of abandoning Russian energy resources takes precedence over the goal of transitioning to a low-carbon economy in the short term. The continued shift back to "dirty" technologies, including increased coal power, certainly complicates the global climate energy transition," the report said.
The regulator considers climate risk management one of the key tasks for maintaining financial stability. "The Bank of Russia sees the management of climate risks and limiting their impact on the financial sector as one of the key tasks within the mandate to maintain financial stability," the report said.