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Financial and Economic Conditions of the Energy Transition for the National Economy

Author

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  • Irina P. Dovbiy

    (South Ural State University, Chelyabinsk 454080, Russian Federation)

Abstract

This study reveals the financial conditions and drivers of the energy transition in the world and in Russia. The purpose of the study is to characterize the essence, content and financial conditions of the energy transition for the national economy. The objectives of the article are to study the features of the energy transition models for developed and developing countries; to consider the impact of "sustainable financing" on the energy transition process; to identify the specific financial conditions and risks. It was found that two major concepts of the energy transition have been formed, reflecting the vision of the goals and timing of completion, conditions and financing formats. The analysis of global investments in the energy transition showed high investors’ optimism: the renewable energy sector is the most attractive; the Asia-Pacific region has become the largest region in terms of investment volume; more energy transition financing programs are implemented in the European Union. The author reveals relationship between policies to achieve carbon neutrality and the phenomenon of "sustainable financing" subject to the principles of ESG, which was expressed in the refusal of the world's leading financial institutions to finance any fossil fuel projects, which could lead to higher demands and direct pressure on the energy and oil and gas sector in developing countries. The main financial risks and financial losses that the Russian economy may face in process of energy transition are outlined. Russia, as the largest exporter of hydrocarbons, will have to adapt to the new conditions despite the unprecedented sanctions pressure on the financial system and the withdrawal of major investors from the oil and gas and electric power sectors. First of all, this is cooperation in the BRICS format — both in the energy and in the financing of infrastructure projects, including within the framework of the BRICS New Development Bank activities. State loans, subsidies, grants, tax incentives, etc. may be used as financial measures of state support for the energy transition.

Suggested Citation

  • Irina P. Dovbiy, 2022. "Financial and Economic Conditions of the Energy Transition for the National Economy," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 25-42, October.
    • Handle: RePEc:fru:finjrn:220502:p:25-42
    DOI: 10.31107/2075-1990-2022-5-25-42
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    References listed on IDEAS

    as
    1. Vaclav Smil, 2010. "Energy Myths and Realities: Bringing Science to the Energy Policy Debate," Books, American Enterprise Institute, number 50339, September.
    2. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
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    More about this item

    Keywords

    energy transition; sustainable finance; climate agenda; decarbonization; BRICS financial cooperation; ESG-risk;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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