The Russian coal sector in a low-carbon world: Prospects for a Coal Transition?

Climate Strategies, Insights report, September 2021, 37 p.

The Russian coal sector has social significance because of the employment it provides, its contribution to regional budget revenues, and the mono-towns it has created. The political leadership is keenly interested in the survival of the sector, not least because strikes in the coal sector contributed to the collapse of the Soviet Union in 1991. Domestic demand for coal has been declining since then, with the recent growth of the sector stemming from increased export. The Russian coal industry expects demand for coal export to continue for another 10–20 years, especially in Asia. However, official estimates of significant growth appear unrealistic, as they reflect previous plans for expanding coal capacity. Most coal-importing counties – including those in Southeast Asia which were seen as a potential new market area for Russian coal – have now downgraded their plans for building new coal capacity. Several markets, including the European Union (EU), South Korea and China, have set a target of carbon neutrality; in others, among them India, Turkey and China, renewable energy is limiting potential growth for coal demand. Moreover, concerns about air pollution are turning previous importers away from coal.

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