Energy transition dominates talks between Russian and Asian investors

Energy transition and decarbonization plans dominated talks between Russian and Asian investors at the Eastern Economic Forum in Vladivostok.

Companies signed several deals on developing cleaner energy and renewables, as well as reducing the carbon footprint of industrial production and shipping.

Talks also demonstrated that Russia's Far East is becoming a hub for energy transition pilot projects, which are attracting foreign investment, and may be rolled out to the rest of the country, if successful.

Far East prospects

"The fact that key parts of Russia's strategic Far East and Sakhalin have been designated as net-zero (Sakhalin) or the fact that Russian Railways has already issued green bonds and has its own low carbon ambitions could create an opportunity for investors," Mark Mozur, lead analyst with S&P Global Platts Analytics, said.

Russian President Vladimir Putin called for the Russian government to work with regional authorities to maximize support for clean energy in the Far East of the country, during an address to the forum.

"For the Far East, with its vast territory and remote settlements, the issue of reliable environmentally friendly energy sources, including autonomous ones, is especially important," he said.

Putin listed a floating nuclear thermal plan in Chukotka, the Torey solar power plant in Buryatia, plans to produce methanol at Nakhodka and in the Amur region as examples of such projects.

He also ordered the government to analyze the possibility of creating a cluster to produce green hydrogen and ammonia in the region, in cooperation with foreign investors, primarily from Japan and China.

Asian investors are already interested in joining cleaner energy projects in the region. On Sept. 2 Japan signed a series of energy cooperation deals with Russia partners covering renewables, hydrogen and ammonia projects, as well as participation in the Kamchatka LNG reloading and storage terminal project.

Separately Deputy Prime Minister Alexander Novak said during the New Knowledge forum that the role of renewables in Russia's energy balance was set to increase in the next few years.

"The share of coal in Russian power is only 12%, and power produced from clean energy sources accounts for around 40%, with 20% coming from alternative sources, and 20% from hydropower," Novak said, according to a statement on the Russian government website.

Russia is planning to increase solar and wind power generation as well as geothermal and tidal power stations.

"On the one hand, the use of renewable energy today is a trend, on the other hand, these are projects that can be economically viable and implemented," Novak said.

Carbon credits

Putin said that he plans to discuss creating a regulatory framework for trading carbon credits with the Russian government in October. Russia has set a target of July 1, 2022, for finalizing the framework.

Previously Rushydro signed a cooperation agreement with the Saint Petersburg International Mercantile Exchange (SPIMEX) on green certificates and establishing a carbon regulation system on Sakhalin. Sakhalin is aiming to be carbon neutral by 2025 and is the location for several energy transition pilot projects.