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A Critical Review of Russia's Energy Strategy in the Period Until 2035

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A Critical Review of Russia's Energy Strategy in the Period Until 2035 International Journal of Energy Economics and Policy ISSN: 2146-4553 available at http: www.econjournals.com International Journal of Energy Economics and Policy, 2019, 9(6), 95-102. A Critical Review of Russia’s Energy Strategy in the Period until 2035 Alexander N. Alekseev1, Aleksei V. Bogoviz2*, Ludmila P. Goncharenko3, Sergey A. Sybachin3 1Department of Organizational and Management Innovations, Plekhanov Russian University of Economics, Moscow, Russia, 2Federal Research Center of Agrarian Economy and Social Development of Rural Areas, All Russian Research Institute of Agricultural Economics, Moscow, Russia, 3Research Institute “Innovative Economy,” Plekhanov Russian University of Economics, Moscow, Russia. *Email: [email protected] Received: 20 June 2019 Accepted: 08 September 2019 DOI: https://doi.org/10.32479/ijeep.8263 ABSTRACT Noting the enormous importance of the Russian and energy complex for international and domestic energy policies, the paper critically reviews the Energy Strategy of Russia until 2035, focusing on the state, challenges, and development trends of the global and Russian energy. We devote a lot of attention to the internal problems and export opportunities, the key aspects of the Russian energy policy in long-term perspectives, as well as review the development scenarios and stages of implementation. While conducting a critical review, we focus on how well the Strategy captures the current situation in international energy markets and trends in the development of the Russian energy and fuel complex. We also look into how comprehensively the Strategy addresses the identified challenges and possible prospects, as well as discuss which provisions could strengthen the Strategy. Our analysis clearly demonstrates that the Strategy adequately addresses both international and domestic processes leading to the current state of the Russian fuel and energy complex. However, we also point out to a number of shortcomings. First, it still supports the export-oriented model of energy development in Russia, but it would be much promising to focus on building a model of resource-innovative development. Second, there is no comprehensive strategy of working on the European energy market and the markets of the Asia-Pacific region, and the proposed scenarios do not take into account the shrinking export demand in the future. Third, it primary focuses on the carbon resources, not providing sufficient attention to the increasing role of renewable energy. Fourth, the outlined ambitious plans of technological modernization of the refinery sector appear hard to implement in the current conditions of protracted technological development and technological sanctions. These identified drawbacks could be used for developing policy recommendations. Keywords: Energy Policy, Energy Strategy, Fuel and Energy Complex, Russia JEL Classifications: Q2, Q3, Q4 1. INTRODUCTION important to analyze Russian federal energy policies, because they have a huge impact on the world energy market and the domestic Russia has been one of the leading world energy suppliers economic growth and development. for many years. No doubt that Russia’s resource resources significantly influence foreign policy strategies (Rutland, 2008; One of the key strategic documents on Russia’s energy policies, Orttung and Overland, 2011; Ocelík and Osička, 2014; Wilson, both domestically and internationally, is the newly adopted 2015; Bouwmeester and Oosterhaven, 2017) and contribute to its Energy Strategy of the Russian Federation in the Period until 2035 economic and social development and (Didenko and Skripnuk, (MERF, 2014). This document provides a long-term vision on 2014; Mau and Ulyukaev, 2015; Sasana and Ghozali, 2017; the development of the world energy in general and the Russian Simola and Solanko, 2017; Russell, 2018). Therefore, it is highly energy and fuel complex in particular. More than that, the Strategy This Journal is licensed under a Creative Commons Attribution 4.0 International License International Journal of Energy Economics and Policy | Vol 9 • Issue 6 • 2019 95 Alekseev, et al.: A Critical Review of Russia’s Energy Strategy in the Period until 2035 determines a set of measure to be taken in order to ensure the most assessment in the “Discussion.” Finally, the paper concludes with advanced, efficient, and safe development of the energy and fuel final remarks. complex in Russia. Consequent, a precise study of this document is necessary to develop a comprehensive understanding of the Russian 2. MATERIALS AND METHODS energy policies, focusing on its domestic and international features. The paper presents a classical case study of the Energy Strategy of Thus, this paper critically reviews the key provisions of the Energy the Russian Federation in the Period until 2035. Since the main goal Strategy of the Russian Federation in the Period until 2035. In of this paper is to critically review the Strategy 2035, we study the particular, we review (a) the state, challenges, and development document in details, focusing on a number of different aspects. First, trends of the global and Russian energy; (b) internal problems we review how the Strategy defines the current state of world and and opportunities for energy development; (c) external challenges Russian energy, its key developmental trends. The special attention and export opportunities of the Russian fuel and energy complex; is, of course, devoted to the internal issues and opportunities for (d) key priorities of Russia’s state energy policy; as well as (e) two energy development. Also, we take into account how the world development scenarios and issues of their implementation. By energy markets are developing and in which directions. Then, taking conducting an analysis, we focus on (a) how well the Strategy into consideration these features, the paper evaluates which energy captures the current situation in international energy markets and policies are proclaimed in the Strategy to address such challenges trends in the development of the Russian energy and fuel complex; and whether they are sufficient. More than that, we analyze which (b) how comprehensively the Strategy addresses the identified provisions might be included into the strategy (and which to be challenges and possible prospects; (c) which provisions could excluded) in order to make it more coherent and adequate in the strengthen the Strategy if being added. context of the current state of and emerging challenges in the Russian fuel and energy complex. For our critical review we use the official It is worth noting that the issues of Russia’s energy development Strategy published on the website of the Ministry of Energy of the and its strategies are actively discussed in the literature, and Russian Federation (MERF, 2014). numerous studies are devoted to various aspects. However, there is no critical study of the Russia’s Energy Strategy until 2035, and 3. RESULTS this research contributes to the scientific literature. 3.1. The Strategy in the System of Strategic Planning For instance, the key issues discussed in the scholarship include In short, the Energy Strategy of Russia for the Period until the following: (1) Russia’s energy security, oil and gas strategies 2035 is an inter-sectoral strategy for a set of industries and (Bilgin, 2011; Mitrova, 2014; Vatansever, 2017); (2) implication areas of state governance in the energy sector. It is based on of energy strategies for sectors of the Russian fuel and energy such strategic documents as the previously adopted Doctrine complex (Kapustin and Grushevenko, 2018; Mareš and Laryš, of the Energy Security of the Russian Federation (approved by 2012). Exploring the implications of Russian Energy Strategy Presidential Decree of November 29, 2012) (MERF, 2012), the project for oil refining); (3) domestic and external energy strategies National Security Strategy of the Russian Federation (approved (Minin and Vlček, 2017; Kuznetsova and Kuznetsova, 2018; by Presidential Decree of December 31, 2015) (President of Kryukov and Moe, 2018). Russia, 2015), the Strategy of the Scientific and Technological Development of the Russian Federation (approved by the Decree There is also a very strong pool of research on how Russia uses of the President of the Russian Federation of December 1, 2016) its energy influence in foreign policy with respect to the European (President of Russia, 2016), the Forecast of the Scientific and Union (Orttung and Overland, 2011; Romanova, 2014; Hauser Technological Development of the Fuel and Energy Sector for the et al., 2018; Boussena and Locatelli, 2013) and post-Soviet Period until 2035, developed by the Ministry of Energy of Russia Counties (Kropatcheva, 2014; Van de Graaf and Colgan, 2017). and others (MERF, 2016). A special attention is devoted to the strategies of energy relations with China (Røseth, 2017; Freeman, 2018; Skalamera, 2018; Xu The implementation period of the 2035 Energy Strategy is divided and Reisinger, 2019). into 2 stages – up to 2020 and from 2012 until 2035. Within the strategy, there are two forecast scenarios (“conservative” and Energy strategies in the development of renewable energy are “optimistic”), which define the lower and upper limit of possible also actively studied (Boute and Willems, 2012; Lanshina et al., changes in the parameters of the fuel and energy balance. The year 2018; Proskuryakova and Ermolenko, 2019; Matraeva, 2019). of 2015 was chosen as the base year. All the calculations included A set of strategic issues
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