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MOSCOW: A rushed transition away from fossil fuels risks driving electricity prices higher, a senior Russian official said on Wednesday, responding to German government comments that an EU carbon tax may make renewables more attractive in Russia.

Russian Deputy Energy Minister Pavel Snikkars said Russia was ready to support global efforts against the negative consequences of climate change but said any push to renewables should be gradual.

“We are not ready for sharp price volatility in the electric power sector, that’s why we will act more gradually in the renewables part,” he told Reuters in a written reply.

Some sceptics of a rapid shift to renewable energy say that falling investment in fossil fuel supplies will lead to higher prices. Supporters say renewables will provide cheaper power.

Russia’s exports of commodities and power to Europe have been in the spotlight because of winter price rises and disputes about supply, at a time when relations between Moscow and the West are at their worst since the Cold War over Ukraine.

German Foreign Minister Annalena Baerbock told the Funke newspaper group over the weekend she expected the European Union’s proposed carbon border tax to encourage a switch to renewable energies in Russia.

She said it would be “a blessing” to work jointly with Russia on green energy. Baerbock has in the past said Moscow uses energy prices to “blackmail” Europe, which receives around a third of its gas from Russia.

Russian state power utility Inter RAO expects its electricity exports to double in 2021 to more than 21 billion kilowatt hours.

CARBON INFLATION

In July, the EU proposed a CO2 tariff on imports of polluting goods to the trading bloc from 2026. That would make some companies pay a border tax on carbon-intensive products including electricity, steel and aluminium.

Such a tax is likely to hit Russia the hardest, according to a joint study by two European climate think tanks.

Alexandra Panina, a board member at Inter RAO, which exports to Finland and the Baltic states, said the company was closely watching how the proposed tax developed and was optimistic about joint cooperation with the EU on green energy.

Panina said Inter RAO was currently facing obstacles in supplying low-carbon and cheap power to the region and that the tax could drive inflation in Europe.

Eurozone inflation hit a record 5.1% in January from a year earlier.

“Introduction of a carbon border tax would speed up inflation, which beat multi-year records last year, and would lead to an additional rise of prices to all the goods in the EU,” she said, predicting exporters would pass costs to consumers.

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