Give up the EU premium market or pay a carbon tax?

Alexander Titov, Head of Oil Market Research at the Institute for Energy and Finance, commented to the internet portal Rupec on the impact of EU cross-border carbon regulation on the Russian economy.

According to Alexander Titov, it is difficult to clearly determine the extent of the threat of the European document to the export industries of Russia. He believes, that the current version of the proposed cross-border carbon regulation mechanism has moved towards relaxation.

"If it was originally supposed to start trading in SWAM certificates in 2023-24, now the period 2023-25 ​​will be a transitional period and aimed at testing and debugging verification and reporting procedures," the analyst said, noting that some reorientation of Russian export flows can still happen.

"The transfer will be due to the possible transfer of a part of production facilities by foreign companies outside Europe. Such environmental arbitration will be done in order to reduce the cost of purchased raw materials, including base polymers, aluminum, chemicals exported from Russia, for the production of goods of a higher processing value," he concluded.