Russian Finance Minister Anton Siluanov warned the Kremlin needs to brace for falling revenues after a stress test showed the global clean energy push could lead to a significant decline in demand for fossil fuel exports.
Modeling done by his ministry showed carbon pricing and the rise of renewable energy could cause “radical changes in the global energy balance,” Siluanov said in an interview before he travels to a Group of 20 financial summit this week in Venice.
“A big share of our budget revenues come from exporting commodities, so we need to understand how we’ll replace falling revenues if these forecasts prove accurate,” Siluanov said.
His comments come amid a shift in Russian rhetoric about global warming and as the European Union is preparing to introduce a new carbon tax on its border. President Vladimir Putin has evolved from a skeptic to acknowledging this year climate change is caused by human activity.
However, cutting Russia’s carbon addiction will not be easy. Russia is the world’s biggest energy exporter and the oil and gas industry is expected to contribute over 40% of government revenue this year.
[Evgenia Pismennaya and Aine Quinn]