After holding top positions across the Russian energy industry for more than a decade, Oleg Dubnov has been heading Skolkovo’s energy cluster since 2017. He shared with East-West Digital News fresh insights about the emergence of green technologies in Russia, the related industrial challenges and the international potential of Russian startups in this field.
So far the Russian innovation ecosystem has not generated a large number of green tech projects. Why so?
This statement is less true than it seems if you take into account technologies that do have a positive impact on the environment but are primarily presented as addressing energy or process efficiency issues. Many of the 650 projects from our cluster correspond to this situation, with a direct or indirect environmental impact.
This year, for the first time, we decided to highlight the ‘green’ dimension of these technologies — from clean energy, to water and air purification, to recycling of household and industrial waste. We launched the Green Tech Startup Booster, which aims to address challenges formulated by the program’s industrial partners, and to launch pilot projects with them. We received 853 applications from 19 countries when we expected just around 300!
This being said, of course, I wish there were many more green tech startups from Russia!
What are the obstacles to having more?
Some obstacles are related to this particular segment, in particular the fact that demand from industrial players, while growing, is still insufficient.
Other issues lie in the lack of maturity of the Russian startup ecosystem in general: many research teams still lack business orientation and skills, while angel and venture financing is clearly insufficient in the country.
Are Russian green tech startups competitive on the global market?
In some areas, Russian technologies can outstrip foreign ones in terms of price-quality ratio and even, in some cases, due to their absolute technological superiority by all characteristics.
A variety of internationally-oriented companies from our portfolio deserve attention. Among them, I would cite, in particular:
- Tion, which has developed an air cleaning system for households and offices and air disinfection technology for medical institutions (offices in the EU and China);
- Pergam, which provides gas transportation operators with a laser methane leakage detection technology (offices in the EU and Switzerland);
- Wiseoil (Bioenery LLC), which offers a set of solutions that make organic waste recycling more profitable with operations in biogas processing plants (Netherlands, the UK, the USA, South Korea);
- Hevel Solar, an R&D company which provides a full range of solutions and services to supply households and businesses with solar energy.
Remarkably, Hevel’s solar modules, based on the HJT technology, have an efficiency of up to 23,8%. This is one of the best results in the world.
Encouraging these international developments — with support from such partners as EDF, Enel and Total — has been one of the main goals of the Green Tech Startup Booster.
How is Russia moving toward the Paris Agreement goals in terms of reducing carbon emissions?
The Paris agreement was signed and ratified. Russia had already fulfilled its obligations when the agreement was signed, since its carbon emissions were well-below the 1990 level (- 48% in 2018). Meanwhile, it’s not certain that all Russian regions taken individually will reach the goal of not exceeding, by 2030, the required level of 70% of their 1990 volume of emissions (see editor’s note below).
The Russian government shows willingness to continue in the same direction. Right now there are discussions about introducing a cross-border carbon tax — a prospect that raises strong oppositions, though. Even though this tax is not imposed yet in Russia, many large companies are already paying serious attention to greenhouse gas emission monitoring and abatement.
There is also a fair amount of environmental protection programs at the government level for specific areas: the Baikal lake, the Volga river, natural reserves…
What about industrial players?
They are making steps in the right direction, and there are several reasons for this. First, Russian companies must meet ‘greener’ standards when competing on international markets. There are several examples of this in the metallurgical industry.
Second, foreign shareholders tend to demand a more attentive attitude to sustainability issues. This is especially the case with internationally-listed companies as well as with certain sectors such as gold mining.
Another factor is that many Russian companies are located in mono-industry cities, with one or several hundreds of thousand inhabitants. In these ‘goroda-sputniki’ there is growing feeling of a corporate responsibility for people’s health.
Last but not least, there is a growing understanding that green is not contradictory to business, that efficiency can be combined with impact. And innovation is key to this.
Thus, all key Russian corporations started developing green programs in the 2000s. Here are a few examples:
- Sibur, the largest Russian chemical company, has developed a sustainable development strategy and publishes annual sustainability reports;
- Severstal, a global leader in steel and mining, has just had MSCI revise its ESG rating upwards from ‘CCC’ to ‘B;’
- NLMK, the Russian largest metallurgical companies, positions itself as a leader in sustainability with a dedicated section on their website;
- The same can be seen withsuch oil majors as Rosneft, Gazpromneft, Tatneft, and others.
Finally, we see that many companies go beyond legal requirements to reduce the negative impact of their activities on the environment. These two things combined — the tightening regulatory framework and voluntary programs — are bringing an impetus to the development of new technologies in this area. We can clearly see that all those activities are not only statements: there is also true action. A part of these programs relies on implementing new technologies, as witnessed by Greentech Startup Booster program.
Biographical note:
Oleg Dubnov, Vice-President and Executive Director at Skolkovo’s Energy Efficiency Cluster, is also a member of the Board of Directors at Russian power company Rosseti. In 2011-2015, he served as Director for Power Engineering in Polyus Gold (2011-2015), where he was in charge of the power supply of upstream assets and power asset management. Previously he was Advisor to the Chairman of the Board at RusHydro, General Director at Far Eastern Energy Management Company, and Executive Director at Unified Energy System of Russia (RAO UES). He engaged in projects related to power engineering restructuring and long-term programs for the Far East electric power systems development.
Editor’s note on Russia’s policies with regards to the Paris Agreement:
Climate Action Tracker (CAT), an international independent scientific analysis that tracks government climate action, gives Russia a rating of “Critically Insufficient” with regards to the agreed Paris Agreement aims of limiting global warming. While conceding it is “more than likely that Russia will achieve both its current Paris Agreement target and its proposed new 2030 target under current policies,” essentially due to the sharp decrease of its emissions in the 1990s, CAT cites “a general lack of action by Russia across the board on climate policy.” In particular, in its newly adopted Energy Strategy to 2035, Russia “continues to focus on expanding its domestic production and consumption of fossil fuels, with a strong emphasis on expanding natural gas exports. Conversely, measures supporting the uptake of renewable energy continue to fall short and Russia is not on track to meet its modest near-term targets.”
In November 2020, President Vladimir Putin signed a decree ordering the Russian government to work towards meeting the Paris Agreement, but stressed any action must be balanced with the need to ensure strong economic development.
