The European Union is actively lobbying for a cross-border tax as part of its carbon regulation policy. We tried to understand why Russian experts believe that this measure infringes on Russian interests.

The topic of carbon regulation and the green economy has been on the agenda of major global debates in the past few years. Every aspect of the debate has been factually correct: from how to calculate the carbon footprint to whether global warming is a myth successfully exploited by vested interests.

And, while virtually none of the issues have been fully resolved, the "green" locomotive is moving forward.

The Russian expert community is heterogeneous in its assessment of "green" trends. Experts do not deny the importance of modernization of the industrial sector, but they note that ecology is used to drive unwanted competitors out of the market. And it is Russia that turns out to be the "undesirable" one.

On the eve of the meeting of the Analytical Club of the National Research Institute of World Economy and International Relations, RAS, where Alexander Grigoriev, PhD in Economics, Deputy General Director of the Institute for Problems of Natural Monopolies, stated that Russia is now the leader in terms of carbon regulation risks.

According to him, it's not just about the oil and gas sector, which even taking into account the challenging environment in the first quarter of 2021 accounted for 30% of all budget revenues.

"Why is this topic important for our country? It really is a risk for us. Exports of goods that are currently potentially subject to the new measure range from $58 billion to $74 billion. In absolute terms, we are the leader in terms of risks," Grigoryev stressed.

The list of potentially affected industries is rather long. Practically any enterprise can fall under the transboundary carbon regulation, at least due to the carbon footprint from transportation.

THREAT OF PROTECTIONISM

Alexei Portansky, leading researcher of IMEMO RAS, who spoke at the session, reminded that the danger of manipulation with the subject of ecology was discussed back in the early 1990s.

"The proliferation of different national environmental standards leads to trade frictions and wars. This is very real. At the moment we are talking about concerns about competitiveness. It is that concern that is at the heart of border carbon policy," he said.

In his view, the topic of border adjustment tax raises complex issues of international trade law.

"Under the rules of the World Trade Organization, members must be transportable and give other members a say in trade policies that may be detrimental to interests. WTO members cannot use environmental measures as a distraction to adopt protectionist peace. The crux of the matter is that these measures do not become protectionist," he stressed.

"A border adjustment tax is a domestic tax that can be adjusted at the border by levying a tax on imports, a rebate or an exemption on exports. If WTO members now do not pay enough attention to the discussions on this tax, we can expect new problems and scandals related to the climate problem, carbon tax," fears Portansky.

According to Grigoriev, in order to defend its interests it is very important for Russia to collect as much detailed information about its carbon footprint as possible.

"We need to understand in numerical terms where we are, the reporting system. We need climate change projects, work in the electricity sector to minimise emissions, and, of course, the introduction of negotiations with the European Union. There is certainly a chance to defend the Russian negotiating position in this area. And what is happening now is a blatant discrimination against Russia and Russian exporters," he said and reminded that even the absorption capacity of Russian forests near the Finnish border is now estimated much lower than in the forest areas of Finland itself.

Recall that the European Union may introduce a tax on the carbon footprint as early as 2023.

The Russian authorities are trying to follow the "green" trend. In November President Vladimir Putin instructed the Cabinet of Ministers to reduce greenhouse gas emissions by 2030 to 70% from the 1990 level, and to develop a low greenhouse gas emission strategy for the Russian Federation until 2050.

Made in Russia // Made in Russia

Author: Maria Buzanakova