Russia’s Prime Minister Urges Country To Prepare For Post-Oil Era

Russia must start getting used to lower oil, gas, and coal use in the future, Prime Minister Mikhail Mishustin told Russian media, adding that the government will approve a plan for adjusting Russia's economy to the global energy transition by the end of the year, TASS has reported.

"The world economy is aimed at a gradual transition to low-carbon energy, and this is already a new reality. It is necessary to prepare for a step-by-step reduction in the use of traditional fuels: oil, gas, coal. [It is necessary] to improve energy efficiency, develop alternative energy, build appropriate infrastructure," the Russian prime minister said.

"What will be done this year? First of all, this is a long-term forecast until 2050. This is the basis for development and decision-making. It includes such parameters as energy balance, carbon balance, macroeconomic parameters, GDP growth rates, trade parameters, investments, growth of real incomes of the population, etc. This [will be] an assessment of our opportunities and risks. The main parameters of the forecast should be developed by October 1," the official explained.

Oil and gas are major export revenue contributors to Moscow's budget. Russia is a major gas supplier to China and Europe, and exports oil all over the world, last month becoming the second-largest oil supplier to none other than the United States.

However, even in Russia, decision-makers are beginning to sense the change in political priorities elsewhere, the reason being this change in priorities has the potential to seriously affect Russia.

Last month, Rosneft president Igor Sechin warned that the carbon border tax the EU has introduced to level the playing field for its heavy industries could do Russia more harm than sanctions. At the same time, Russia has the world's largest carbon sink in Siberia forests and wants to capitalize on that by having it recognized. Over the longer term, however, if energy shift forecasts are correct, the country would need to adjust to much lower oil—and maybe gas—demand on a global level.