The European Union, Russia’s largest trading partner, recently proposed a major new carbon tax that could cost Russia’s economy hundreds of millions, if not billions, of dollars. This is just the most immediate of the risks to energy exporters emanating from key global players’ pledges to become carbon-neutral by 2050-2060—pledges made not just by the EU but by China and the United States, as well. The related “green” policies will have a major impact on energy markets, and Russia—whose budget relies heavily on oil and gas exports—is likely to be among the hardest hit. The switch to a low-carbon energy mix worldwide could slow down demand for hydrocarbons as soon as the next 10-20 years,1 which, in turn, would reduce revenue to Moscow’s coffers.
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