Global Corporations and Economy
For a Climatic CSCE: Climate Protection as a Confidence-Building Measure

Energy and climate policies are mostly long-term projects. If cooperation agreements are reached here and contracts are concluded, then this is good for the fight against climate change. However, no less important is the dividend of peace received in the course of this process, writes Friedbert Pflüger, Head of the European Cluster for Climate, Energy and Resource Security at at CASSIS, University of Bonn.

Just as in 1970, a gas pipe deal foreshadowed the political detente between East and West during the Cold War, today a joint climate policy could foster new trust between Russia and the West. Chancellor Willy Brandt (SPD), Foreign Minister Walter Scheel (FDP), as well as big business in Germany (Wilhelm Christians, Deutsche Bank or Otto Wolff von Amerongen, the Eastern Committee of the German Economy) played a decisive role in establishing a policy of detente between East and West half a century ago. The appointed head of the new German government, Olaf Scholz (SPD) and his (probable) so-called “traffic light” coalition with the Greens and the FDP can — in alliance with industry — again become the shapers of a new Eastern policy. It would be a big challenge for German politics to convince the US, EU and Russia that a common climate policy is critical for the survival of humanity on our planet, as well as for renewed confidence and the stabilisation of international cooperation in the coming years.

The chances this will happen are not bad at all. The coalition agreement just adopted by Germany’s new government says: “We want to develop our cooperation with Russia towards issues of the future (e.g. hydrogen, healthcare) and global challenges (e.g. climate, environment).” The US has also made it clear that despite all its fundamental differences with Moscow, it can move to closer cooperation on climate policy. During the visit of the US Special Representative for Climate Protection John Kerry to Moscow in mid-July 2021, he agreed with President Vladimir Putin to expand cooperation on climate issues.

Morality and Law
Climate Change and State Interest
Anatol Lieven
The future of negotiation and action on limiting climate change seems likely to be characterised by Realist considerations of state interest and power, but with new understandings of state interest (in the West, but also to a lesser extent elsewhere) shaped by international communities of moral pressure. Hopefully, this will lead to a new form of enlightened self-interest in time to save us all from disaster, Valdai Club expert Anatol Lieven writes.

Putin has already made a speech at the St. Petersburg International Economic Forum (SPIEF) on June 4, 2021, in which he made an offer of cooperation. Political differences had to be put aside and the countries should, together, shape “a transition to hydrocarbon neutrality”. In his speech, about a quarter of which was devoted to the protection of the environment and climate, he spoke about the threats that Russia will “feel”, including melting permafrost, spreading deserts and land erosion. De-carbonisation efforts relying on nuclear energy, hydrogen, carbon capture and storage (CCS), reforestation and renewable energy are well under way, and the government has issued green bonds to finance it. Putin is pursuing ambitious goals: the proposed long-term development strategy to reduce greenhouse gas emissions, presented in March 2020, and the presidential decree of November 2020 are aimed at fulfilling the obligations of the Paris Agreement on climate and limiting greenhouse gas emissions to 70% of the 1990 level by 2030. In addition, in the Presidential Address to the Federal Assembly in April 2021 Vladimir Putin has formulated an ambitious goal: over the next 30 years, total emissions in Russia should be less those of the EU.

Of course, fossil fuels will continue to play an important role in Russia for the foreseeable future; their weight in the Russian economy is too great — as is energy hunger around the world. Of course, in Russia, as in any other country (especially the United States), there is strong resistance from the traditional energy industry lobby (including the Russian State Duma) against the turn to climate-friendly policy. One can notice, however, that a paradigm shift in energy and climate policy is really taking place in Moscow. Germany, Europe and America must watch it closely. We should also pay attention to how Russia presented itself at COP26 in Glasgow. Something is moving here!

However, it would be a mistake to believe Russia will do everything that Western climate policymakers are proposing, from Habeck to Timmermans and Kerry. Russia will go its own way and define its own priorities.

Nevertheless, there are huge opportunities for Western companies to implement joint energy projects with Russian partners: wind and solar power plants, biomass, reforestation, hydrogen (e.g. methane pyrolysis or blue hydrogen production in combination with CCS), energy efficiency, climate-friendly mobility on roads, water and airways, etc. Just imagine what opportunities are opening up, for example, for Siemens Energy or Viessmann — a company that already produces modern and efficient heating systems in Russia! What a great opportunity for developers and operators of wind farms or solar fields! From storage and battery factories to the smart meters or insulation materials industry! It’s also great for the use of digital solutions and artificial intelligence in the Russian energy transformation!

Replacing coal with modern gas power plants (ready for the future use of hydrogen) — coupled with a determined fight against methane slip — is also part of the climate policy. It would be very short-sighted if support for instruments such as government insurance for Hermes investments in the coal-to-gas transition, or in the modernisation of existing gas power plants and the conversion of pipelines to hydrogen fail. It would be counterproductive in terms of climate policy if Western banks do not promote modernisation in the fossil fuel sector: it would be purely ideological, and could calm consciences in Berlin or Brussels, but impede concrete progress in reducing emissions. First of all, you need to get to the low hanging fruit!

Energy and climate policies are mostly long-term projects. If cooperation agreements are reached here and contracts are concluded, then this is good for the fight against climate change. However, no less important is the dividend of peace received in the course of this process. We can learn from the Cold War era: the formula “changes through trade” may not have emerged as its inventor Egon Bahr hoped in the 1970s. Climate cooperation between Russia and the West could be one big confidence-building measure in the style of the 1975 CSCE Final Act. Through cooperation in the planning, implementation, operation and maintenance of wind or solar parks, the production of climate-neutral hydrogen, the replacement of coal-fired power plants with modern gas-fired power plants, the production of electric or hydrogen cars, or the improvement of energy efficiency in the heating sector, confidence is gradually re-strengthening. Moreover, there is a growing understanding that both sides will benefit more from dialogue and cooperation than from political and military confrontation. When it comes to climate change, we are all in the same boat. Let’s work together — not lecturing one another, but respecting specific interests, capabilities, and even sensitivities!

By adopting the Helsinki Final Act of the CSCE, East and West created what could be called “internal rules of order” for relations with each other during the Cold War: respect for borders, non-interference in the internal affairs of other states, cooperation in the field of economics and technology, assistance in working with people, and confidence-building measures in the military sphere. Why don’t we start today by preparing a Climate CSCE along the lines of the 1975 model, according to which the European states (including Russia and Ukraine), the United States and Canada would develop common principles for the treatment of our land and atmosphere? It would be a wonderful project, which could restore faith in politics and diplomacy among the younger generation, at least if such a meeting is not used as a forum for euphonious speeches, smug triumph, blaming others and arrogance, and if we really want to make progress on such a serious issue.

Morality and Law
Real World Change on Climate Will Rely on Free Markets, Dialogue, and Solidarity
Christof Van Agt
While environmental social and governance criteria remain context dependent and cannot be universally applied, it is key to balance these factors with real world market realities through a technology agnostic approach, writes Valdai Club expert Christof Van Agt.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.