MOSCOW (Reuters) – The Russian economic system can simply climate the carbon border tax as proposed by the European Union in July 2021, the World Financial institution mentioned on Friday, calling on Moscow to take cooperative motion alongside the worldwide path to a inexperienced transition.

The EU proposed a Carbon Border Adjustment Mechanism (CBAM), or CO2 tariff, on polluting items from 2026, which think-tanks mentioned may result in elevated charge fees on merchandise from Russia, primarily on metals and fertilisers.

“Even when Russia continues its present progress mannequin, the economy-wide macroeconomic impact of EU CBAM can be negligible to small relying on its design,” the World Financial institution mentioned in a report on dangers and alternatives of the inexperienced transition.

“Even when the U.S. joins the EU in introducing a carbon border adjustment, Russia’s losses will enhance solely negligibly.”

The World Financial institution lowered Russia’s financial progress forecast earlier this month, highlighting dangers associated to the inexperienced vitality transition amongst others, together with geopolitics and the COVID-19 pandemic.

After shrinking by 3% in 2020, its sharpest contraction in 11 years, the Russian economic system is about to develop 4.3% this yr, in line with the World Financial institution, however momentum will probably wane within the subsequent few years.

“The low-carbon transition efforts of the EU and different giant buying and selling companions create a contemporary incentive for Russia to meet up with overdue diversification and modernisation of its economic system,” the World Financial institution mentioned.

Russia is the world’s fourth-largest emitter of greenhouse gases and depends closely on fossil gas exports – however President Vladimir Putin has ordered the federal government to work in the direction of chopping emissions.

Russia’s plan to scale back its carbon footprint by 2050 would require investments of between $13.6 billion and $54.5 billion per yr, the central financial institution mentioned final month.

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