Russia Leads Multinational Stablecoin Initiative
- Feb 23, 2020 5:03 pm GMTFeb 21, 2020 11:22 pm GMT
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Russian President Vladimir Putin is the most influential person in the blockchain industry, according to Changpeng Zhao, the CEO of major cryptocurrency exchange Binance, which added five trading pairs: Binance Coin (BNB), Bitcoin (BTC), Ether (ETH) and XRP at the beginning of December, as well as adding Tether (USDT) later the same month against the Russian ruble.
Putin was the first to propose a multinational cryptocurrency along with the Eurasian Economic Union, or EAEU, and BRICS countries after being advised by Vitalik Buterin in the wake of the 2017 cryptocurrency bubble.
With the EAEU’s Trade and Economic Cooperation with China coming into effect this year, Russia, with full support of the EAEU countries and BRICS Business Council, is seeking to establish a multinational stablecoin backed by commodities; along with BRICS pay, a cloud platform that will connect the countries’ national payment systems through a mobile payment app. Russia, India and China are planning to link national payment messaging systems, China’s CIPS and Russia’s FMSB, to accomplish this. This will be a major step on the path to dedollarization and a decoupling from the current United States-controlled global banking system, and could lay the foundation for BRICS member state integration. The Bank of Russia, the country’s central bank, has already begun testing stablecoins pegged to commodities in a regulatory sandbox.
Digitalization is a priority
Russia is the world’s largest country. It is a leader in technology and a primary energy producer and exporter, with 80% of its economy dependent on exporting natural gas, oil — including high-sulfur fuel oil — metals and timber.
In Soviet times, Russia’s centralized electricity plants powered many iron-curtain countries from Romania to Ukraine, and still remains an important player in the global energy system, providing 10% of global primary energy production and 16% of international energy trade. Russia ranks fourth in the world in primary electricity production, energy consumption and carbon dioxide emissions, as the country is 70% electrified by hydrocarbon energy. Russia’s CO2 emissions are almost double the G-20 average.
Recently, Russian scientists discovered a massive fountain of methane gas — emitting up to nine times the global average — bubbling from the seafloor in the East Siberian Sea and further polluting the air. Oceans act as the largest carbon sink of our planet and host 80% of all life while providing half of the planet’s oxygen. According to the U.S. National Oceanic and Atmospheric Administration:
“More than 90% of the warming that has happened on Earth over the past 50 years has occurred in the ocean.”
Oceans are warming at the same rate as if five Hiroshima bombs were being dropped into them every second. The Russian Natural Resources and Environment Ministry acknowledged that Russia is heating faster than the rest of the world — warming 2.5 times quicker than the planet’s average — as wildfires raged across country-size tracts of Siberian forest, followed by extreme flooding. This has contributed to the rise of sea levels from the melting of ice sheets in the Arctic, which is also warming faster than the rest of the world.
To diversify Russia’s hydrocarbon energy-intensive economy, President Putin signed a decree in 2018 establishing a special “Digital Economy” state program, with digital energy infrastructure mentioned as a key component. It also includes the goal to increase the share of renewable energy sources in its Energy Strategy, so that 4.5% of the total energy consumption by 2030 comes from renewable energy sources to boost science and technology development, environmental improvement, and energy supply for isolated power systems, which in turn will strengthen the economy and create new jobs. The Digital Development and Energy Ministries have also developed projects focused primarily on digitalization, regulation and coordination of the energy sector.
The expansion of the global digital economy created many new economic opportunities, with Russians behind some of the most successful digital platforms in the world. For example, Sergey Brin co-founded Google, which now has some 90% of the market for internet searches; while Vitalik Buterin co-founded Ethereum, which allows programmers to develop decentralized blockchain applications — so much so that it’s losing its scalability, resulting in very high gas fees, as slow transaction times require a substantial electricity supply for processing. In December, the Russian government said it had completed a multi-day test of a national intranet known as RuNet.
The Russian Association of Cryptocurrency and Blockchain counts over 2,000 members. Companies involved in cryptocurrency payments include Yandex, WebMoney, Mail.ru, Vkontakte, Odnoklassniki, QIWI/QBT, MirPay and Wex. Companies involved in cryptocurrency mining include BitRiver, Minery and Russian Mining Company, which utilize Siberian hydropower plants to metabolize electricity into money very cheaply at $0.04 per Kw/h, comparable to the solar energy prices in India, at $0.03 to $0.04 per Kw/h.
Digitalization of the energy sector as a whole, and of the power sector in particular, is part of a global trend that both the EAEU and BRICS countries are involved in. According to the IEA, investments in digital technologies globally are higher than in gas-fired power generation. So far, Rosseti — Russia’s national energy grid operator — has developed a blockchain solution for payments for the retail electricity sector with tech startup Waves, recently commencing pilot testing in the regions of Kaliningrad and Sverdlovsk.
Solar digital initiatives for power plants and waterways
Currently, solar energy utilization in Russia stands at just around 0.3%, but the plummeting solar energy costs and breakthroughs in high-efficiency solar cells could aid the transition to renewable energy use.
Last year, the Moscow-based Skolkovo Institute of Science and Technology demonstrated an organic solar cell able to withstand 6,000 gray units of gamma radiation — an achievement the institute says is a record high. Solar company Hevel is producing solar modules with an energy conversion efficiency of 22% and is behind building solar and storage into diesel power plants, hydro plants, oil and gas refineries and solar plants in EAEU countries, with green-finance funding from both the European Bank for Reconstruction and Development and the Green Climate Fund. Hevel will audit the emissions in these solar-energized facilities with the world’s first blockchain-issued green certificates.
Water pollution — which includes CO2 pollution — is also a major issue in Russia, which houses 25% of the world’s freshwater. Approximately 70% of Russia’s drinking water comes from surface water, and the remaining volume from groundwater. More than 10 million Russians currently lack access to quality drinking water, with around 35% to 60% of total reserves of drinking water not meeting sanitary standards, according to Russian regulatory bodies. This exacerbates health issues in many cities and villages across the country, with only 8% of wastewater correctly treated before being returned to the waterways.
Worsening this situation is Russia’s plans to delay complying with the International Maritime Organization’s mandate to lower marine sector emissions by over 80% by switching to lower-sulfur fuels starting on Jan. 1, 2020. The lack of compliance implies that Russia will not be auditing its huge inland waterway and deepsea fleets in Russian-controlled waters, which account for 53% of the Arctic Ocean coastline, as it unveils major plans for Arctic oil and gas drilling and shipping. “Permafrost is undergoing rapid change,” cautioned the Ocean and Cryosphere in a Changing Climate report by the Intergovernmental Panel on Climate Change. The changes threaten the “structural stability and functional capacities” of oil industry infrastructure, the authors warned.
To monitor and measure water pollution in the Kuybyshev Reservoir, the largest water reservoir in Eurasia, robotics research center Airalab Rus and the Tolyatti State University have developed a solar-and-battery energized drone boat named “Drone on the Volga” that monitors water pollution and distributes its readings through the Ethereum blockchain, including data such as the drone boat’s exact location at the time the readings were taken. Nevertheless, satellites remain a crucial and efficient instrument in providing valuable environmental data.
Solar Power Satellite (SPS) Systems
Space-based science fiction has been part of mainstream Russian literature since 1784, with Vasily Alekseyevich Lyovshin’s novel, “The Newest Voyage.” The book describes the first Russian flight to the Moon. Centuries later, on Oct. 4, 1957, Soviets ushered in the space age when the Soviet Space Agency launched the first battery-operated satellite, Sputnik 1, into an elliptical low Earth orbit from the Baikonur spaceport in Kazakhstan. From then on, the country served as the locomotive of space-age technological advancements such as the first probe to impact the Moon (1959), the first man in space (1961), and a number of other space related “firsts.”
Russia’s Znamya SPS project began in the late 1980s and consisted of a series of orbital mirror experiments that were intended to beam solar power to Earth by reflecting sunlight to increase the length of a day, with the goal of boosting productivity in farms and cities. In 2011, Russia and India launched a scientific-educational satellite called YouthSat to study solar-terrestrial relationships. On July 14, 2017, the Russian Space Agency, Roscosmos, successfully launched Mayak satellites that focused the sun’s solar rays onto Earth. Mayak — complete with an android tracking app — circled the planet at a height of about 600 kilometers (372 miles) in a pole-to-pole, low Earth orbit.
During the Eleventh BRICS Summit in November 2019, the BRICS space agencies that are leaders in world space initiatives agreed to build a “virtual constellation of remote sensing satellites” for various applications, including environmental monitoring and natural resource management.
Tax policy in Russia and Member States
Russia taxes 13% of CO2 emissions from energy use. According to an IMF report, Russia ranks number three in subsidies to the hydrocarbon industry, at $551 billion, and holds the world’s largest natural gas reserves (27% of the total). It has the second-largest volume of coal reserves and the eighth-largest volume of oil reserves. Approximately 60% of the subsidies go to natural gas, with the remainder spent on oil extraction and electricity, including renewable power generators.
As the warmest decade on record — marked by extreme storms, deadly wildfires from Siberia to Brazil’s Amazons to Australia, and heavy flooding — came to a closure, a study stated that decarbonization of the energy sector is not yet on the horizon for Russia, which retains a skeptical attitude toward the problem of global climate change. The share of solar in the world’s energy balance is insignificant and not expected to exceed 1% by 2040, driving Hydrocarbon CO2 emissions higher and higher.
Russia ratified the Paris Agreement during the longest-ever United Nations climate summit, which ended without a deal to regulate carbon markets. The major powers, behind over 75% of global emissions, are set to miss emissions reduction goals, with the U.S. pulling out to undermine the climate pact despite developing a revolutionary solar cell technology with an efficiency of 27.3% to 32% that could trounce the energy market.
Amid European Central Bank officials urging European banks to develop a cheaper alternative to Facebook’s Libra stablecoin, which could potentially reach 2.7 billion users (35% of the world’s population), Russia is taking the lead in issuing a multinational stablecoin backed by commodities.
Russia’s cyber-initiative connects some of the most promising hydrocarbon rich economies stretching across Eurasia, Africa and South America. Separately, BRICS member states all have plans to issue central bank digital currencies as well. As a result, more than 41% of the world will be using electric energy-intensive blockchain and smart contract technology. This initiative will potentially further boost science and technology development, create new jobs, improve trade efficiency among member states by replacing other fiat currencies used in trade settlements, and create a technologically resourceful trade block. However, if such technology is fueled by hydrocarbon energy produced and heavily subsidized by member states, temperatures are expected to rise 3.2 degrees Celsius above preindustrial levels by the end of the century, according to the latest emissions gap report. Particularly in light of the fact that Russia, Brazil, China and South Africa are not on track for a 1.5-degree world.
A decisive role could be played by BRICS in finding innovative solutions to the functioning of the current global framework, particularly in transitioning to green economies. Russia’s Ministry of Economic Development recently published an action plan to mitigate risks associated with present and future climate change, citing among other things, the government’s calculation of the risk of Russian products becoming unable to compete if they fail to meet new climate-related standards. Ending subsidies for fossil fuels could reduce global emissions by between 1% and 11% by 2030, the U.N. has found. Eliminating greenhouse gases over the next 20 years could help Earth avoid between 0.3 and 0.8 degrees of warming by 2050, as research suggests.