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Following the 2022 invasion of Ukraine and subsequent Western sanctions, Russia has pivoted its fossil fuel exports toward Asia. While this has partially offset revenue losses from the European market, the report argues that Russia remains locked in a hydrocarbon-centric model that is increasingly misaligned with the decarbonisation trajectories of its primary Asian customers. China and India have leveraged discounted Russian oil and coal to support economic growth while simultaneously diversifying their energy portfolios and expanding renewable capacity. Vietnam has seen modest growth in Russian coal and nascent LNG trade, balancing energy security with sustainability goals. The report highlights structural bottlenecks, such as limited rail capacity for coal and the risks of a 'shadow fleet' for oil, as significant constraints on Russia's long-term export viability.

The Russian coal sector is facing a period of decline driven by Western sanctions, rising transport costs, and a shifting global market. While the sector initially buffered the impact of sanctions through peak prices in 2022–2023, 2024 has seen a significant drop in export profitability, with 50% of producers reporting losses in Q1. The report outlines three futures: a 'Developing Coal Sector' following a peace agreement, a 'Shift to the East' as a continuation of the current status quo, and a 'Declining Coal Sector' resulting from expanded conflict and further isolation. Regional impacts vary significantly, with Yakutia emerging as a growth center due to its proximity to Asia, while traditional Siberian hubs like Kuzbass and Khakassia face economic instability and social risk.

The report analyzes how EU and G7 sanctions on Russian coal imports have disrupted the Kuzbass region, which produces over 55% of Russia's coal. It details the region's high economic dependency on coal, the logistical challenges of redirecting exports to Asia, and the risks of social unrest due to potential job losses. The document presents three future scenarios (Reference, Soft, and Hard) through 2030, projecting significant declines in production, revenue, and employment under the 'Hard' scenario, while noting that reduced coal activity may lower methane and CO2 emissions.

The authors contend that Russia's current climate pledges are insufficient and that the government must acknowledge the global shift away from coal to protect its coal-producing regions, particularly Kuzbass, from economic disruption. While Russia is a top global coal exporter, the authors warn that the collapse of the global coal development pipeline and policies like the EU's carbon border adjustment mechanism threaten the sector's viability. They advocate for proactive economic diversification and a managed phase-out to support workers and the global 1.5°C target.

The Russian coal sector provides a low economic contribution to the national GDP but maintains high social and political significance, particularly in regions like Kuzbass. Despite this, the sector is heavily reliant on indirect state subsidies and faces a deteriorating infrastructure, with the average age of coal power plants reaching 53 years. The report highlights a disconnect between the Russian government's expectations of export growth and the reality of decarbonization trends in key markets such as the EU, China, and India. It argues that Russia lacks an official decarbonization scenario and that conservative views currently dominate policy, ignoring the risks of stranded assets and the impact of the EU's Carbon Border Adjustment Mechanism (CBAM). The authors propose a 'just transition' framework consisting of social programs for workers, regional economic diversification, and the introduction of an internal carbon price.

The document examines the dominance of coal in the Kuzbass region, the environmental and health impacts of this industry, and the Russian government's current diversification strategies. It argues that while the government has initiated diversification plans, these remain focused on fossil fuels and matured sectors, neglecting renewable energy and innovative industries. The author suggests that substantive transition is unlikely until global coal demand drops sharply.

The paper argues that while coal is insignificant to Russia's national GDP, it is critical to regional economies like Kuzbass. It criticizes official diversification plans for continuing to rely on extractive industries and instead proposes five innovative low-carbon pathways: utilizing abandoned mines for geothermal heating and energy storage, developing wind and solar PV, producing solid biofuels, establishing Green Special Economic Zones (GSEZ), and supporting small business entrepreneurship.

The Russian coal sector provides a negligible contribution to the national GDP but remains politically significant due to regional employment and historical stability concerns. While the Russian government continues to anticipate growth in coal exports, particularly to Asia, the report argues that this is unrealistic given the global low-carbon transition, the obsolescence of Russia's coal-fired power fleet, and the increasing competitiveness of renewable energy. The document highlights that the sector is heavily reliant on indirect government subsidies, such as reduced rail tariffs. It proposes a three-part just transition framework consisting of social re-employment programmes, regional economic diversification (especially in the Kuzbass region), and the implementation of a domestic carbon price to internalize environmental costs.

The report finds that 2,277 million tonnes per annum (mtpa) of new coal mining capacity is under development globally, with 614 mtpa already under construction. This expansion is heavily concentrated in China, Australia, India, and Russia, which together represent 77% of global development. The authors argue that this trajectory is incompatible with the Paris Agreement, as coal production would need to decline 11% annually through 2030 to limit warming to 1.5°C. If all proposed capacity is realized, 2030 production would be over four times the 1.5°C-compliant pathway. The report also highlights a potential $91 billion USD in stranded assets and significant greenhouse gas emissions, estimated between 5,000 and 5,800 Mt of CO2-equivalent annually from these projects.

Coal mining accounts for 8 percent of global methane emissions. While significant potential exists for abatement through degasification and ventilation air methane (VAM) oxidation, progress is hindered by policy, financial, and technological barriers. In China, legal frameworks and conflicting safety/emission standards create hurdles, while India lacks resource assessments. Russia faces issues with licensing and inefficient degasification systems. In the US, split-estate ownership on federal lands and a lack of federal mandates limit viability. The report suggests that while large-scale investment is available, a lack of small-scale funding for design and demonstration is a primary obstacle, proposing revolving funds and micro-loans as solutions.