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Sakhalin is regarded as a testing ground for identifying GHG regulation measures that can be extended to other Russian regions. In January 2021, the Russian Ministry of Economic Development, in cooperation with the regional government, approved the “Roadmap for the Implementation of an Experiment to Establish Special Regulation of GHG in the Sakhalin Region”. The overall aim of the roadmap is to ensure that Sakhalin achieves carbon neutrality by 2025, and includes plans for a pilot carbon trading system.

In 2022, the State Duma approved a “Federal Law on Conducting an Experiment to Limit GHG Emissions in Selected Federal States of the Russian Federation”, introducing mandatory emissions reporting and verification requirements for regulated entities and obliging them to comply with the allocated emissions allowances. The law also sets a legal basis for allowance circulation between entities. The Sakhalin Pilot ETS was mandated to launch in September, but the start has been delayed pending cap-setting and allowance allocation processes.

The Sakhalin government approved a list of 50 regulated entities, emitting at least 20,000 tCO2 per year, in 2022, and a carbon registry started operating in test mode in September that year. The first compliance period is set to start in 2024. Covered entities will have to surrender allowances for all their covered emissions, and allocation is expected to be based on free allocation.

In 2023, regulated entities submitted their first verified emissions reports for 2022, which became the basis for setting individual caps for 35 entities in September 2023.