Russia can resist EU carbon tax at borders, World Bank says

A participant stands near a World Bank logo at the International Monetary Fund – World Bank 2018 Annual Meeting in Nusa Dua, Bali, Indonesia, October 12, 2018. REUTERS / Johannes P. Christo / File Photo

MOSCOW, December 10 (Reuters) – The Russian economy can easily overcome the border carbon tax as proposed by the European Union in July 2021, the World Bank announced on Friday, calling on Moscow to take cooperative measures along the global path to a green transition.

The EU has proposed a Carbon Frontier Adjustment Mechanism (CBAM), or CO2 tariff, on polluting products from 2026, which think tanks say could lead to increased charges on products from from Russia, mainly on metals and fertilizers. Read more

“Even if Russia continues its current growth model, the macroeconomic effect of the EU CBAM would be negligible to small depending on its design,” the World Bank said in a report on the risks and opportunities of the green transition.

“Even if the United States joins the EU by introducing a carbon border adjustment, Russia’s losses will only increase insignificantly.”

The World Bank lowered Russia’s economic growth forecast earlier this month, highlighting risks related to the green energy transition among others, including geopolitics and the COVID-19 pandemic. Read more

After declining 3% in 2020, its biggest contraction in 11 years, the Russian economy is expected to grow 4.3% this year, according to the World Bank, but momentum is likely to falter in the next few years.

“The low-carbon transition efforts of the EU and other major trading partners are creating a new incentive for Russia to catch up in diversifying and modernizing its economy,” the World Bank said.

Russia is the world’s fourth-largest emitter of greenhouse gases and relies heavily on fossil fuel exports – but President Vladimir Putin has ordered the government to make efforts to cut emissions.

Russia’s plan to reduce its carbon footprint by 2050 will require investments of between $ 13.6 billion and $ 54.5 billion per year, the central bank said last month. Read more

($ 1 = 73,4600 rubles)

Report by Andrey Ostroukh; Editing by Andrea Ricci

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