Effect of carbon regulations on the financial technological development: Russian and European companies’ adaptation strategies

Abstract

The plans announced by the European Union to impose a carbon fee by 2022 on commodities purchased from both European and external manufacturers make it increasingly relevant to examine the adaptation of Russian and European companies to low-carbon requirements. The article aims to assess the financial technological costs, technological achievements and energy transition risks for enterprises in Russia and the EU. Theoretical approaches to analyzing technological effects of carbon requirements on enterprises constitute the methodological framework of the study. The research methods of comparative qualitative and quantitative analysis were used in relation to technologies introduced by European and Russian large companies, reached values and dynamics of the carbon footprint in manufacturing, energy consumption, the percentage of renewable energy, the size of costs and investments, projected parameters of traditional energy, the EU plans, and the cost price of alternative energy. The empirical evidence includes public reports of European and Russian exporting companies affected by the carbon fee introduction, as well as microeconomic statistics. The analysis showed that both European and Russian major exporters by the end of 2021 had already initiated certain efforts to reduce their carbon footprint and achieved satisfactory outcomes in this area. In some cases, the Russian companies were even more successful than the European ones, but in general they lagged behind. However, expenses of the European companies are more significant, and energy transition risks for them are higher, which significantly reduces the dividend received by the leader. We propose recommendations to protect Russian business, including export-oriented one, from excessive costs incurred in the development of low-carbon energy. These recommendations can be of use for authorities when implementing industrial policy.