Sibur Plans to Use Russia’s Forests to Offset Carbon From 2024
(Bloomberg) -- Petrochemicals giant Sibur PJSC plans to offset some of its emissions by tapping the carbon-capture potential of Russia’s massive forests from 2024.
Sibur will consider buying carbon credits from projects that plant trees or boost the CO2 absorption capacity of existing woodlands, becoming one of the first Russian companies to do so. The country is keen to monetize the “carbon sink” potential of its vast forests, but such programs have faced criticism from climate scientists.
“From 2024, when Russia should adopt a methodology and verification of such projects, we hope to start using this option to offset our carbon footprint,” Maxim Remchukov, Sibur’s head of sustainable development, said in an interview. It’s part of an emissions plan that also includes growth in renewables, energy efficiency and carbon-capture and storage, he said.
Sibur is already supporting a carbon monitoring pilot project in western Siberia to assess the potential of local forests as carbon sinks. President Vladimir Putin estimated in April that Russia’s biosphere absorbs about 2.5 billion tons of CO2 equivalent every year, though the figure requires scientific verification.
Scientists and activists have found fault with carbon-offset programs, citing a lack of sufficient oversight. Europe, which is seeking to be the world’s first climate-neutral continent by 2050, doesn’t accept any contribution from offsets in its emissions-reduction plan.
Sibur last year generated almost 20% of its revenue from exports to Europe. Yet it isn’t put off by the European Union’s skeptical stance, according to Remchukov, who said the company’s plan responds to investor demands for low-carbon development.
“It’s unclear if we will be able to adopt the credits for offsetting our exports to the EU,” he said. But Sibur intends to proceed with the offsets, as “they are important to our investors, our clients; it’s exactly one of those cases when market demands go further than regulatory demands.”
The EU’s own plans include imposing a levy on emissions embedded in some imported goods to ensure a level playing field for its companies. The so-called carbon border adjustment mechanism would apply to industries such as cement and power, and be introduced in 2023 at the earliest. The bloc has said nations that have comparable emission-reduction measures could be spared the levy.
The European Commission is due to unveil a draft law with the details of the mechanism on July 14. Russia’s Energy Ministry estimates that losses for the nation’s oil and gas industry alone may reach $3 billion to $4 billion a year as a result of the tax.
Sibur is concerned by the prospect of the levy, yet so far can’t provide an estimate for its own potential losses and is awaiting the commission’s proposal, Remchukov said.
The company is updating its environmental, social and governance strategy up to 2025, which will be ready in the second half of this year and may include more ambitious emission-reduction targets, according to the executive.
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