Carbon taxes could hurt Russia more than sanctions, says oil tsar

Russian President Vladimir Putin (L) meets with Rosneft CEO Igor Sechin (R) at the Novo-Ogaryovo state residence outside Moscow, Russia, 12 May 2020. [EPA-EFE/ALEXEI DRUZHININ / SPUTNIK]

Igor Sechin, chief of oil giant Rosneft, has told the Kremlin that carbon border taxes like the European Union’s could inflict far greater damage to Russia’s economy than sanctions, the Kommersant newspaper reported on Monday (23 August).

The European Commission has outlined plans to impose a CO2 tariff on polluting goods from 2026 that will force some importers to pay carbon costs at the border on carbon-intensive products such as steel.

Moscow has said the tax could affect Russian goods worth $7.6 billion (€6.47bn), including iron ore, aluminium, pipes, electricity and cement, and that the tax could eventually be broadened to affect oil, gas and coal exports.

Sechin has told President Vladimir Putin the EU tax and the possibility of similar taxes elsewhere could cause “incomparably greater damage to the economy than illegal restrictions imposed on Russia and Russian companies,” Kommersant reported.

That was a reference to years of foreign sanctions on Russia that the West began imposing in 2014 to punish Moscow for annexing Ukraine’s Crimean peninsula.

Moscow cries foul over EU’s planned carbon border tax

Russia’s economic development minister warned last week that the EU’s plans to deploy a carbon tax at the bloc’s borders will not be in line with World Trade Organisation (WTO) rules, just as Brussels doubled down on the idea of green tariffs.

Sechin, a close Putin ally, made the remark in a letter to Putin on June 30, Kommersant said.

Reuters could not independently confirm the report and Rosneft, the oil producer that Sechin has led since 2012, did not immediately respond to a request for comment.

In the letter, Sechin proposed that Putin should seek to have Russia put on a list of countries that are exempt from the carbon tax because of the greenhouse gas absorbing capacity of their ecosystems, Kommersant said.

He proposed securing international recognition for the carbon absorption capacity of Russia’s vast forest as well as supporting carbon sequestration projects, it reported.

He also suggested developing a system to have Russian-calculated carbon units recognised abroad, Kommersant said.

EU’s anti-climate-dumping tool worries Russia 

In a sign that Moscow has taken note of the EU’s plan to deploy a carbon border tax, a top Kremlin adviser has urged Russia’s business giants to start adapting now if they want to continue selling their wares in the single market.

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