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What role can our country take in a low-carbon future that will help reduce CO2 emissions and is the domestic market ready for such global changes
On September 15, 2021, business and government representatives met at a business breakfast that opened the Tyumen Oil and Gas Forum (TNF). The topic of the meeting is the role of our country in the future low-carbon way of the world economy. BCG Managing Director and Partner Anton Kosach acted as moderator. Trends have collected the most interesting insights from the discussion on how our country can fit into the global “green” way of life.
The main task is to maintain the competitiveness of the economy of our country
The trend towards decarbonization and “green” production is one of the main ones in the world, and a global decision on this issue has already been made. For our country, a gradual transition to low-carbon development is inevitable not only for political reasons, but also because it is economically feasible. If the eco-agenda is not followed, Russian products may end up on the top of the supply curve and fall out of the world market.
The problem is that the world looks to Russia as the main supplier of carbon. This is due to the fact that our country is export-oriented, it produces oil, gas and coal and supplies them to the foreign market. To change the attitude towards our country, it is necessary to introduce new technologies in all sectors of the economy.
To reduce CO emissions2, you need to start with the gas sector. Here, methane leaks during production and transportation should be eliminated. Then increase the proportion of carbon dioxide capture and injection. If possible, it is necessary to modernize production without shifting the price to the consumer – otherwise this can also undermine competitiveness.
Dmitry Kobylkin, ex-minister of natural resources and ecology of our country:
“The decarbonization policy has been adopted, and we are moving in this direction – it no longer depends on us. This must be faced as inevitable. The question is where we are today and what we have to do in the coming years to 2030 and in the long run to 2060.”
How to reduce CO emissions2 and declare their “greenness” in the international market
Modernize production. We need to work on a gradual reduction in carbon intensity. Create carbon landfills with a “green” ecosystem so that new results can be achieved in reducing the carbon footprint and show the world the absorptive capacity of Russian forests. Also, large market players should think about planting more trees and greening their territory: plants absorb CO2 and environmentally friendly processing of harmful gas. This is a certified mechanism that clearly traces how much carbon a tree has absorbed from birth to death.
Alexander Moor, Governor of the Tyumen Region:
“In order to solve global global issues, the unity of power, science, production and business is necessary. An example of such interaction: on August 30, together with Minister of Science and Higher Education Valery Falkov and Presidential Aide Andrei Fursenko, we opened the first carbon test site in our country, in the Tyumen Region. The main task of the landfills is to develop methods that would be recognized by the international community so that we can prove the absorption capacity of our forests, our ecosystems.”
Capture and pump CO2. It is necessary to provide factories with installations for filtration, capture and subsequent disposal. For example, the goal of PJSC Lukoil is to prevent emissions in the amount of 500 thousand tons per year at its green power plants. And over the past ten years, SIBUR Holding has increased the volume of associated petroleum gas processing by almost three times: if in the middle of the 8s it was 22 billion cubic meters, now it is 23–XNUMX billion cubic meters.
Reuse carbon dioxide. VPs of large companies say that SO2 can be used in carbonated drinks, greenhouses, some types of fuel. For example, today for the directors of the world’s largest corporations, it is important how much recycled products will be used in the polymer. However, the economic viability of such solutions on a global scale has not yet been calculated.
It is also possible already now to increase the secondary and additional use of energy in the circuits of plants. To do this, it is necessary to significantly change the energy supply system, including the use of solar energy.
Will society have a demand for low-carbon technologies
Products that are created using low-carbon technologies cannot be cheap. This means that someone will have to pay for them – not only companies, but also the end consumer. The problem is that today buyers are not yet ready to pay for the “green”. Much depends on the policies of countries and how they will push society towards environmentally friendly solutions.
The task of business is to look for technical solutions for low-carbon activities and show them to politicians and citizens. However, accelerated decarbonization requires not only the proposals of oil and gas companies, but also the willingness of society.
Government support needed
Federal and regional authorities can issue regulations and form new taxes on non-environmentally friendly production. In addition, many regions have their own gas accumulations and they are interested in reusing them without harm to nature, and not just burying them.
Dmitry Artyukhov, Governor of the Yamalo-Nenets Autonomous Okrug:
“48 trillion cubic meters of gas reserves are pushing us to engage not only in classical production, but also in processing. For this, the Yamalo-Nenets Autonomous Okrug has the entire infrastructure. The resource base is unique, its chemical composition allows us to consider the widest range of subsequent products. And transport arteries have been created – classic and new. The Northern Sea Route can play a unique role in bringing our bearish corner to a greener global economy.”
Is it possible to commercialize CO2 and how to do it
The financial sector is skeptical about the ideas to use JI2 for the production of ammonia, fuels and other technologies that do not yet have a real demand. First, you need to study the proposals of the world market and proceed with caution. Business transformation towards carbon neutrality will require an appropriate regulatory framework, government support measures, participation of development institutions and the banking community.
Dmitry Snesar, Senior Vice President of VTB Bank:
“I would concentrate on the profitability of green projects and not be in a hurry to develop technologies that may not be necessary for the global market. Instead, it is better to attract money from the West for their “green” projects, for something that really has an industrial application. We need to look at what they are ready to buy from us and attract investments for this.”