Dr. Tadevosian Armen (Sokratovich)
Russian Presidential Academy RANEPA, Russia
Title: RUSSIAN CARBON MARKET DEVELOPMENT
Abstract:
Following the ratification of the Paris Climate Agreement in September 2019, Russia is now entering an active phase of development with regard to carbon regulation. Russia together with many other countries has joined the global effort to limit global warming to 1.5-2 degrees Celsius by 2100, compared to the level of the pre-industrial era (i.e. the 19th century). In collaboration with domestic businesses and experts, the Russian government is developing a comprehensive legislative framework to support the country's transition to a low-carbon economy. The Russian government is also developing a carbon market and the necessary infrastructure to allow local companies to participate in carbon market projects.
In November 2020, the President signed Decree No. 666 'On the Reduction of Greenhouse Gas Emissions'. One year later, in November 2021, Prime Minister approved this Strategy until 2050. As of 24 August 2024, the Ministry of Economic Development has proposed revising the Strategy’s goals in a more ambitious direction. In particular, the baseline scenario would set a target to reduce net CO2 emissions to 1.483 billion tonnes CO2 equivalent by 2030, which is 11% lower than the target set in 2021.
Furthermore, in July 2021, following extensive collaboration between government and business, the Federal Law No. 296 'On Limiting Greenhouse Gas Emissions' was adopted. This law represents a significant step forward in the development of the carbon market. The legislation introduced mandatory reporting on greenhouse gas emissions for the largest emitters (from 50,000 and 150,000 tonnes of CO2 equivalent) in two stages. Furthermore, a legal framework has been established to facilitate the trading of carbon units (offsets) and the implementation of climate projects.
In accordance with Federal Law No. 296, large emitters of greenhouse gases (defined as those exceeding 150 thousand tonnes of CO2 equivalent per year) will be required to calculate their emissions, prepare a report, and submit it to the registry from 2023. Smaller emitters (defined as those exceeding 50 thousand tonnes of CO2 equivalent per year) will be required to do so from 2025. The registry will facilitate the automatic collection of reports from Russian companies. This mechanism will form the factual basis for achieving carbon neutrality by 2060 and may also pave the way for the introduction of a carbon price in the near future.
The core component of the Russian Federation's carbon regulatory framework is the registry of climate projects and carbon units. As of February 2025, Russia has registered 50 climate projects, with a total of 88.9 million carbon units issued or planned for issuance. The outcome is highly satisfactory, but the country is aiming for even greater results.
In addition to carbon units, Russia will begin issuing the first emission performance credits in 2025, according to Federal Law No. 295. This is the verified result of implementing the established carbon allowances, expressed as the difference between the emission performance credits (so-called quota) and the actual volume of greenhouse gas emissions, equivalent to one tonne of carbon dioxide. To date, the emission performance credits have been established as part of the pilot programme to introduce carbon regulation on Sakhalin. This experiment is carried out in accordance with Federal Law No. 34 on conducting an experiment to limit greenhouse gas emissions in certain constituent entities of the Russian Federation.
The objective of this experiment, which will run until 2028, is to achieve carbon neutrality in Sakhalin by the end of 2025. Regional regulated entities that have received quotas – carbon allowances (from 20,000 tonnes of CO2 equivalent) for GHG emissions from their operations on Sakhalin and can become emission performance credits holders, provided that the specific level of GHG emissions per year falls below the quota. In this case, the volume of the emission performance credits will be calculated as the difference between the quota (carbon allowances) and the organization's actual GHG emission level. This will be registered in the Kontur registry and will serve as the basis for issuing carbon units equal to the volume of the emission performance credits into circulation.
Russia has made significant strides over the past three-four years in developing the legislative framework and the necessary infrastructure to establish a carbon market. The country currently has both a voluntary and a regulated carbon market. By the end of 2023, more than 1,000 Russian companies had become participants in the greenhouse gas emissions reporting system. With the introduction of mandatory reporting for smaller emitters from 2025, we anticipate this figure to increase tenfold and even more.
Another key area of focus for carbon regulation is aligning standards and approaches in this market with Russia's major international partners. Primarily, this encompasses the EAEU and BRICS+ countries. Recently, the BRICS Contact Group on Climate and Sustainable Development was successfully launched, which will serve as the primary platform for developing joint initiatives and discussing ways to harmonize the climate legislation of member countries.
Keywords: carbon regulation, greenhouse gases, Paris agreement, carbon credits, carbon offsets, carbon dioxide, climate projects, BRICS.
Biography:
He has 15 years of experience in the oil and gas sector, and for the past seven years, he has been the head of government and media relations at the representative office of a major European energy company in Russia.
Since 2019, he has been working on the sustainable development and ESG business transformation agenda. He advises companies on the development of carbon markets and the implementation of climate projects.
He is a member of the Sustainability Committee of the Association of European Businesses in Russia, which has over 400 members. As part of this committee, he participates in legislative activities in the Russian Federation on the preparation of national regulations in the field of ESG (the expert council under the Ministry of Economic Development).
Since 2024, he has been a freelance advisor to the Russian branch of SGS, a Swiss testing, inspection, and certification company. His work focuses on business advisory services for sustainable development.
In 2023, he was appointed Vice President of the ESG Business Club at the Presidential Academy RANEPA, which is the largest expert community on sustainable development in Russia.
Since 2021, he has been an author of learning courses and a speaker at major Russian universities, including Bauman Moscow State Technical University, the Higher School of Economics, RANEPA, and Plekhanov Russian University of Economics.
He is also a member of the jury of the Green Standard Awards, a national award in Russia for green construction and building maintenance.
His main area of expertise is in reducing carbon emissions in the oil and gas sector. He studies operational and corporate methods to reduce the carbon footprint of energy companies. He also works on carbon regulation, implementing climate projects, and issuing carbon units.
He speaks Russian, his native language, as well as English, Italian, and Armenian.