Template-Type: ReDIF-Paper 1.0

Author-Name: Natalia Turdyeva
Author-Email: TurdyevaNA@cbr.ru
Author-Workplace-Name: Bank of Russia, Russian Federation


Title: Russian Economic Transformation: Navigating Climate Policy and Trade Restrictions

Abstract: We are considering the introduction of climate policy in Russia under conditions of 
quantitative export restrictions. We have enhanced the model employed in the article (Burova et al., 2023) 
by incorporating a mechanism for quantitative trade restrictions.

We demonstrate that in the case of deterioration in external economic conditions, such as a decline 
in the prices of Russian exports, the significance of quantitative export restrictions becomes secondary. 
The reason is that at low export prices the optimal physical volume of exports only marginally exceeds or
may even be less than the quantitative restrictions.

Without unrestricted access to global green technologies, ambitious climate policy goals may become excessively 
costly in terms of economic impact. In the presented model, attempting to achieve a 70% reduction 
in CO2-equivalent emissions from the 2016 level, coupled with decreasing prices for Russian exports 
and quantitative trade restrictions, could result in a deviation of GDP in 2040 by 11% from the baseline scenario, 
which implies maintaining the current status quo in climate policy both in Russia and globally.

A more economically viable approach seems to be a moderate climate policy: achieving a 36% reduction in emissions 
from combustion compared to the 2016 level results in a 4.7% downward deviation of real GDP in 2040 from the baseline 
scenario. Only 0.3% of this decrease is attributed to the impact of domestic climate policy through an emissions 
trading system. The remaining 4.4% is explained by the deterioration of external economic conditions, stemming 
from the climate policies of other countries and quantitative restrictions on Russian exports.

In the absence of a proactive climate policy, the carbon intensity of Russian GDP rises, amplifying transitional 
and physical risks of addressing the consequences of climate change. Essential measures to mitigate these risks 
involve the promotion and development of green industries, particularly those oriented towards exports.


Length: 73 pages
Creation-Date: 2024-02
Revision-Date:
Publication-Status:
File-URL: https://www.cbr.ru/StaticHtml/File/158737/wp_125.pdf
File-Format: Application/pdf
File-Function:
Number: wps125
Classification-JEL: C68, F13, Q52, Q54, Q58
Keywords:  Russia, climate policy, NGFS scenarios, export restrictions, CGE, emissions trading, ETS
Handle:RePEc:bkr:wpaper:wps125