Regulations on the flaring and utilisation of associated petroleum gas (APG) have been in place since the early 1980s. Their purpose is environmental conservation and the effective use of limited natural resources. The formation on international frameworks, such as the World Bank’s Global Gas Flaring Reduction, which was launched in the 2000s, and the raising of environmental awareness in emerging and developing countries have also decreased the amount of APG flaring around the world. In Russia, however, the situation on APG utilization and flaring is entirely different. Here, the utilisation of APG has not improved since the 1990s. Even now, Russia remains the world’s largest APG-flaring country. This means that it is now explicitly confronted with problems on APG flaring and utilisation, while it struggles to adapt to global environmental protection trends and to modernise its economy.
President Putin regards this problem as one of Russia’s most urgent tasks. On the 26 April 2007, at the Presidential Address to the Federal Assembly, he ordered his government to design solutions to achieve a more than 95% effective APG-usage level (less than 5 % flaring). In addition, the 7th government decision was selected, a policy that can enforce a fine for flaring over 5% of all APG and also for the use of infrastructure in oil fields that does not meet standards of approval. Nevertheless, the effectiveness of this fine policy remains limited. This situation suggests that the APG-flaring-and-utilisation problem in Russia has its own specificity and that it should not only be analysed from the current situation, but from the perspective of the continuity or incoherence of the Soviet Union actors, policies and institutions surrounding it, during this country’s transition to a market economy.
As mentioned above, the APG utilisation and flaring in Russia is one of the most urgent environmental and economic problems among this country’s hydrocarbon industries. This study attempts to give some explanation on this situation. First, it analyses long-term APG-utilisation trends in Russia. Then, actors, policies and institutions involved in Russia’s APG utilization and flaring are traced. Finally, through the above-mentioned analysis, this paper tries to explain the situation and factors of Russia currently being the largest flaring country.
JEL classification codes: L71, P28, Q35, Q40
Climate change has been recognised as an important policy issue that affects nature and socio-economic systems of all continents and oceans over the last few decades. In order to achieve the ambitious goal of ‘keeping a global temperature rise to less than 2 degrees Celsius above pre-industrial levels’ by the Paris Agreement agreed at COP 21 in 2015, formulation and implementation of climate change policies, especially mitigation ones to reduce greenhouse gas (GHG) emissions have been recently advanced all over the world.
Russia, as one of the largest energy-resource rich countries and GHG emitters, has been also in the process of modernisation towards a low-carbon society, especially after the occurrence of global financial crisis in 2008-2009. Under this circumstance, the formulation and implementation of climate change policies have recently begun in earnest in Russia through its signature on and ratification of the Paris Agreement effective in 2016. These policies in Russia, however, often end in failure.
In this context, this present paper firstly clarifies the current situation of climate change and its causes such as GHG and air pollutants emissions in Russia, followed by the critical consideration of previous studies on this global thematic issue. By revisiting the formulation and implementation process of Russian climate change policies with a special focus on its multi-stakeholders, this paper tries to explain why these policies are not materialised in Russia, that is, factors influencing on its policy failure.
Throughout a series of analysis, it becomes clear in this paper that Russian environmental administration has been weakened whilst the government spending with environmental purposes on a downward trend in Russia after starting market transition in the 1990s. This paper also derives that institutional arrangements in the governmental committees enable Russian oil and gas companies to do lobbying for reflecting their interests on relevant policies. Besides, it becomes unveiled that residents and civil society organisations (CSOs), as one of representative protesters demanding policy reforms through social movements, have an insignificant influence on climate change policies in the case of Russia.
This paper then concludes that these factors are crucial propositions given to Russian climate change policies to materialise its transition towards a low-carbon society as well as big challenges to be overcome for its future sustainable growth.
This paper explains how the EU has strengthened energy policy based on “solidarity” with the Russia-Ukraine gas disputes in 2006, 2009 and Ukraine Crisis. The European Commission succeeded in framing gas disputes as an urgent issue requiring an EU-level solution. As a result, energy solidarity has been one of the fundamental principles in the article 194 of the TFEU and the energy policy has been shared competence between the EU and Member States. European Energy Security Strategy made with Ukraine Crisis in 2014 proposes Energy Union that will pool resources, connect energy networks and unite negotiating power with one voice.
But there must be a long way to achieve intended objectives of Energy Union, because creating Energy Union is related to restructuring institutions that had supported stable energy relations between the EU and Russia for more than 40 years. Energy infrastructures (pipelines, storage utilities and so on) and the price formula (long-term contracts, destination clauses, take-or-pay clauses, gas prices linked to oil prices and so on) were the common institutions between two regions. The stable relations have deteriorated by institutional changes in the energy market. The EU promotes internal energy market integration through unbundling and mandatory third party access by the Third Energy Package and the Competition law. The EU’s new liberalised market model with diversification of energy suppliers and energy mix is no longer the one that Russia used to share with the EU. Internal energy market integration reinforced by the energy solidarity principle improves the EU negotiating power with energy suppliers. The EU is building a “wider regulated area” by “exporting” the EU energy regulations and directives to neighbouring countries and even to Russia. Russia is forced to abolish destination clauses, reduce prices and loosen take-or-pay clauses to keep its market share in Europe, although she, depending on the vertically integrated energy companies such as Gazprom, is reluctant to adapt to conditions changing in the European energy market.
Ukraine Crisis is often recognised as the issue of energy security, because Ukraine monopolised pipelines between the EU and Russia. Since 2006, the European Commission has been using Ukraine Crisis to enhance energy security policies of the EU and competence creep in the energy policy. Now Energy Union is officially one of the priorities of the new Commission.
But the EU will be confronted with difficulties in and out. First, creating Energy Union may be with creeping competence of the Commission in the energy policy and may cause dissatisfaction, even opposition to integration from Member States with different energy mix. Second, there are problems of external dimensions of Energy Union. It is difficult to ensure consistency between the energy policy and the external policy of Member States, because they are different both in energy mix and energy suppliers. And Energy Union must set a stable framework to enable the project finances to develop energy resources in Russia and so on, because most of Member States depend on imported energy from them. Energy Solidarity is crucial to overcome these difficulties.