Russia in the Post-Paris World: New Energy Landscape

PI: Sergey Paltsev, MIT Energy Initiative

Abstract

Achieving the Paris Agreement goals of climate stabilization requires a transformation of energy system over the upcoming decades. Russia, as a fossil fuel producer, will have to adjust its economy to reflect lower export earnings from oil, coal, and natural gas. Using a global energy-economic modeling framework, we will assess the impacts of energy transformation policies and the resulting global market dynamics on Russian economy, including the changes in its sectoral output, energy mix, and GDP. The analysis will provide a basis for strategic decision-making to industry representatives, policy makers, and academic researchers in Russia and other countries. Understanding sectoral and economy-wide impacts is crucial for assessing the magnitudes of the challenges that lie ahead. The project will be a tool to enhance the discussions between government, industry and academia on the long-term strategy for energy and economic transformation of Russia.

Report

  • Project Title: Russia in the Post-Paris World: New Energy Landscape
  • Principal Investigator:  Sergey Paltsev, Senior Research Scientist, MIT Energy Initiative; Deputy Director, MIT Joint Program on the Science and Policy of Global Change
  • Grant Period: March 2018 – February 2019 

The goal of the seed grant was to continue the informed discussions between government, industry and academia on the long-term strategy for energy and economic transformation of Russia that were initiated in the Year 1 of the project. In the Year 2 of the project we continued to explore the impacts of the Paris Agreement-based climate policies that target reductions in GHG emissions on the Russian economy and energy exports. 

We employed the MIT Economic Projection and Policy Analysis (EPPA) model, which is a general equilibrium model of the world economy and energy, developed over the last couple decades at the MIT Joint Program on the Science and Policy of Global Change, to provide a starting point for a discussion of the risks for Russia in different scenarios. Our research team (Dr. Sergey Paltsev, Dr. Henry Chen, and Dr. Jennifer Morris) analyzed the Russian economy in a global context by applying the EPPA model to show the potential risks to Russian economic growth from a reduction in Russian energy exports (oil, coal, and natural gas). We have finalized the analysis and published it in the leading Russian peer reviewed economic journal Voprosy Ekonomiki (2018, Volume 4, pages 76-94). 

The English version of the paper is under revision in one of the leading peer reviewed journals on energy strategies. To inform a wider research community about our findings, the paper was presented at the Annual Conference on Global Economic Analysis in Cartagena, Colombia. Read the presented paper

We also initiated a focused study on the prospects of Russian involvement in the Asian energy markets. To establish connections, we organized seminars at the Higher School of Economics in Moscow, Institute for Energy and Finance in Moscow, Lukoil company office in Moscow, and the Far Eastern Branch of the Russian Academy of Sciences in Vladivostok. Read the report about the seminar at the Academy

As a result of these discussions, we have explored in detail the dominant direction in Russian energy strategy of diversification of geographical structure of Russian exports. The paper on the scenarios for Russian energy exports to China is in preparation to be submitted to a peer reviewed journal. 

As planned, our project established the ties with Russian academic researchers, government officials and industry representatives and enhanced the discussions between government, industry and academia on the long-term strategy for energy and economic transformation of Russia. 

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