Russian exports amid geopolitical instability: The case of physical and transitional climate risks

The paper examines the impact of physical and transitional climate risks, which to some extend shape the geopolitical situation in the world, on Russian exports. The gravity model of international trade was employed to model the existing relationship. Estimation of the gravity equation by means of the Poisson Pseudo Maximum Likelihood (PPML) method using data on Russian export flows to 72 countries over the period 2010—2021 revealed that climate change and the ambitions of trading partner states towards low-carbon development determine the dynamics of Russian exports. In particular, national physical climate risks have a detrimental impact on Russia’s exports due to the destruction of infrastructure, loss of capital, reduced quality and availability of natural resources, and increased social tensions. Extreme climatic events and climate change measures in trading partner countries spur the development of Russian exports. Namely, physical climate risks of importing countries may increase the demand for key Russian goods for economic recovery purposes. Changes during the transition to a low-carbon economy in trading partner countries also generate opportunities for Russian export growth due to the country’s role as a major supplier of energy and mineral products, as well as technologies for the alternative energy production and electrification of transport