Deputy Prime Minister Victoria Abramchenko has approved the roadmap for Russia’s first carbon trading pilot on 19 January.

The project will take place in the Far Eastern island of Sakhalin, and could lead to the region becoming carbon neutral by 2025, according to the minister.

The roadmap was prepared by the Ministry of Economic Development and the local authorities of the Sakhalin region. What would be done?

•       By mid-2021 the law on the regulation of emissions up to 2025 in Sakhalin will have been prepared; it will be considered by the State Duma in June-July 2021.

•       Up to August 2021, emissions and absorption capacity in the region must be assessed, after which a database would be created.

•       By September 2021, it is planned to define the economic activities that account for 80% of GHG emissions.

•       By April 2022, it is planned to create an information system that would run in test mode to support the experiment, including the registration of the participants, climate projects and emissions.

•       The roadmap includes a section on climate projects and CO2 trading in the period from September 2021 to February 2023. The first results of the project could be registered by July 2022, when the first emissions trading will take place. The local authorities, together with the Ministry of Energy, are to produce measures to reduce emissions and increase the absorption, which would permit the creation of a list of priority climate projects by September 2021.

According to Abramchenko, the key consequence of the pilot project would be the formation of a regional system of GHG emissions and its integration with international systems of trading, while in the future, other interested regions of Russia could integrate upon state approval. A special work group has been set up for monitoring the Sakhalin pilot project, with the first meeting to be held in January.

“We welcome the news, as this implies exact measures and steps to be undertaken to allow emissions reduction, which is part of Russia's Climate Pack. Besides, despite Russia abandoning plans for a country-wide carbon trading scheme, this provides grounds to assume that the system might be expanded into other regions, if it were to be successful, which would allow the country to prepare for the EU carbon tax,” VTB Capital (VTBC) said in a note.