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Pain without gain? Reviewing the risks and rewards of investing in Russian coal-fired electricity

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  • Gorbacheva, Natalya V.
  • Sovacool, Benjamin K.

Abstract

Coal use—and thus investment—is expected to grow considerably in the Russian Federation over the next few decades. Projections suggest that at least $200 billion of investment will be needed to modernize existing coal-fired power plants by 2030, but the bulk of this financing is to come from the private sector or foreign enterprises. This study asks: what are the possible investment risks and rewards of pursuing this expansion of coal in the Russian power sector? To provide an answer, the study uses a mixed methods approach consisting of elite semi-structured interviews and a review of English and Russian peer-reviewed literature. The study provides a brief overview of the Russian electricity sector before discussing five distinct rewards to investing in coal such as low production costs, competitive returns on investment, rural modernization, expansion of exports, and the acceleration of innovation. These benefits however are offset by five risks: inferior performance to investments in oil and gas, development challenges, air pollution and climate change, social degradation from mining, and a tradeoff with existing policies incentivizing renewable energy and energy efficiency. The study concludes by analyzing what these disparate risks and rewards mean for policymakers and energy analysts.

Suggested Citation

  • Gorbacheva, Natalya V. & Sovacool, Benjamin K., 2015. "Pain without gain? Reviewing the risks and rewards of investing in Russian coal-fired electricity," Applied Energy, Elsevier, vol. 154(C), pages 970-986.
    • Handle: RePEc:eee:appene:v:154:y:2015:i:c:p:970-986
    DOI: 10.1016/j.apenergy.2015.05.066
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    Cited by:

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    2. Svetlana Ivanova & Anna Vesnina & Nataly Fotina & Alexander Prosekov, 2022. "An Overview of Carbon Footprint of Coal Mining to Curtail Greenhouse Gas Emissions," Sustainability, MDPI, vol. 14(22), pages 1-22, November.
    3. Stephenson, J.R. & Sovacool, B.K. & Inderberg, T.H.J., 2021. "Energy cultures and national decarbonisation pathways," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
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    5. Maria Mrówczyńska & Marta Skiba & Anna Bazan-Krzywoszańska & Dorota Bazuń & Mariusz Kwiatkowski, 2018. "Social and Infrastructural Conditioning of Lowering Energy Costs and Improving the Energy Efficiency of Buildings in the Context of the Local Energy Policy," Energies, MDPI, vol. 11(9), pages 1-16, September.
    6. Gong, Xu & Wen, Fenghua & Xia, X.H. & Huang, Jianbai & Pan, Bin, 2017. "Investigating the risk-return trade-off for crude oil futures using high-frequency data," Applied Energy, Elsevier, vol. 196(C), pages 152-161.
    7. Klimenko, V.V. & Fedotova, E.V. & Tereshin, A.G., 2018. "Vulnerability of the Russian power industry to the climate change," Energy, Elsevier, vol. 142(C), pages 1010-1022.
    8. Zaman, Rafia & Brudermann, Thomas & Kumar, S. & Islam, Nazrul, 2018. "A multi-criteria analysis of coal-based power generation in Bangladesh," Energy Policy, Elsevier, vol. 116(C), pages 182-192.
    9. Yuan, Jiahai & Li, Xinying & Xu, Chuanbo & Zhao, Changhong & Liu, Yuanxin, 2019. "Investment risk assessment of coal-fired power plants in countries along the Belt and Road initiative based on ANP-Entropy-TODIM method," Energy, Elsevier, vol. 176(C), pages 623-640.
    10. Evgeny Lisin & Wadim Strielkowski & Evgeniya Krivokora, 2016. "Economic Analysis of Industrial Development: a Case of Russian Coal Industry," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 12(4), pages 129-139.
    11. Bahman Huseynli, 2024. "Coal Energy in Energy Consumption: An Empirical Analysis in the Case of Russia and Türkiye," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 541-548, May.
    12. Aleksei V. Bogoviz & Svetlana V. Lobova & Alexander N. Alekseev, 2020. "Current State and Future Prospects of Hydro Energy in Russia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 482-488.
    13. Elizaveta Gavrikova & Yegor Burda & Vladimir Gavrikov & Ruslan Sharafutdinov & Irina Volkova & Marina Rubleva & Daria Polosukhina, 2019. "Clean Energy Sources: Insights from Russia," Resources, MDPI, vol. 8(2), pages 1-25, May.
    14. Bratanova, Alexandra & Robinson, Jacqueline & Wagner, Liam, 2016. "New technology adoption for Russian energy generation: What does it cost? A case study for Moscow," Applied Energy, Elsevier, vol. 162(C), pages 924-939.
    15. Zhang, Xiaochun & Myhrvold, Nathan P. & Hausfather, Zeke & Caldeira, Ken, 2016. "Climate benefits of natural gas as a bridge fuel and potential delay of near-zero energy systems," Applied Energy, Elsevier, vol. 167(C), pages 317-322.

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