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The influence of climate change considerations on energy policy: the case of Russia

Author

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  • A. Markandya
  • A. Golub
  • E. Strukova

Abstract

To those working on climate change, it is obvious that energy policy should be influenced by climate change considerations. The question that this paper seeks to answer is, to what extent do they influence policy and what contribution can a careful analysis of the costs and benefits of climate change options have on the formulation of that policy? We seek to understand this by looking in some detail at energy policy formulation in Russia. To do so it is necessary to look at the whole set of issues that determine energy policy. These include energy security, macroeconomic and uncertainty factors, local environmental issues and social issues. The analysis has been carried out for a specific case ± that of the RF, where energy policy is currently under formulation to 2010. Two options have been looked at: a "High Coal" option, where there would be a substantial change in fuel mix away from gas to coal; and a "High Gas" option where the current fuel mix is retained and the increase in demand is met from all sources in proportion to current use. The analysis shows that, at international prices for fuels, the High Coal option is attractive. However, when we include the potential decline in price for natural gas in the European market, the relative preference for this option drops dramatically but it still remains the preferred option. When account is also taken of the carbon benefits of the High Gas option, using plausible values for carbon, the attraction of the High Coal option is further reduced but not altered. When account is finally taken of the health associated with the lower use of coal in the High Gas option, the preference can be reversed but it requires a critical value for the health benefits. This critical value - at around $3,000 for a life year lost - is plausible for the RF; if anything the actual value is probably higher. What the analysis shows is the need for a careful evaluation of the different factors determining energy policy. Among these is climate change. It is not the critical factor but it can be an important one. Perhaps more important are the environmental benefits that go with the lower carbon High Gas options.

Suggested Citation

  • A. Markandya & A. Golub & E. Strukova, 2003. "The influence of climate change considerations on energy policy: the case of Russia," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 3(3), pages 324-338.
  • Handle: RePEc:ids:ijgenv:v:3:y:2003:i:3:p:324-338
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    Cited by:

    1. Rubbelke, Dirk T. G., 2003. "An analysis of differing abatement incentives," Resource and Energy Economics, Elsevier, vol. 25(3), pages 269-294, August.
    2. Rubbelke, Dirk T.G., 2006. "Climate policy in developing countries and conditional transfers," Energy Policy, Elsevier, vol. 34(13), pages 1600-1610, September.
    3. Pittel, Karen & Rübbelke, Dirk T.G., 2008. "Climate policy and ancillary benefits: A survey and integration into the modelling of international negotiations on climate change," Ecological Economics, Elsevier, vol. 68(1-2), pages 210-220, December.
    4. Kiula, Olga & Markandya, Anil & Ščasný, Milan & Menkyna Tsuchimoto, Fusako, 2014. "The Economic and Environmental Effects of Taxing Air Pollutants and CO2: Lessons from a Study of the Czech Republic," MPRA Paper 66599, University Library of Munich, Germany, revised Oct 2015.

    More about this item

    Keywords

    climate change; coal; energy policy; environment; fossil fuel; gas; Russian Federation.;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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