We all stand in solidarity with the people of Ukraine, a peaceful democratic nation that’s under brutal and unprovoked military attack. Russia’s Vladimir Putin started this needless war under the grand illusion of restoring some bygone Soviet era. Where this goes from here is anyone’s guess.
Fossil Fuels Fund Putin’s War Machine
What we do know is that fossil fuels are funding Putin’s awful war machine. Russia is now the world’s second largest oil exporter, after Saudi Arabia. Having developed a reputation as the “world’s largest gas station,” Russia’s energy sales funded 40% of its federal budget and accounted for 60% of its export revenues when the pandemic hit in 2020. As the economy recovers, those contributions are heading even higher now.
Russia’s biggest energy customer is none other than the European Union, accounting for nearly half of Russia’s total export sales in 2020. Russia provides the EU with 40% of its natural gas and one-quarter of its oil. This gives Russia considerable leverage over a region that plans to decarbonize its economy by 2050.
At the same time, however, the EU’s ambitious climate goals pose a major threat to future energy sales that now serve as the lifeblood of the Russian economy. Putin wants to delay this day of reckoning by plunging global energy markets into chaos.
On this count, Putin’s plan appears to be working. Global oil and gas prices are now at their highest levels since 2008 Pricing pressure is most acute in Europe, where spot prices for natural gas have soared 1,000% in the past year. (To put this in perspective, if spot oil in Europe followed a similar path, it would trade at $750 per barrel!)
Such energy price inflation benefits Russia in two ways. First and foremost, it fattens the Kremlin’s coffers and bank accounts of Putin’s oligarch friends. Second, it could spark such a public outrage that it blocks progress toward nationally adopted carbon reduction plans.
So Far, Putin’s Strategy Is Backfiring
So far, Putin’s strategy to wield energy as a political weapon appears to be backfiring, however. The European Union has just doubled down on its climate commitments. Germany has even taken the fateful step of shelving the Nord Stream 2 gas pipeline, which was about to supply more than half of Germany’s natural gas from Russia.
But an even bigger energy challenge lies ahead. For economic sanctions to have their maximal effect, all Russian energy exports will need to be banned. This would trigger another round of sharp price increases that tests the will of energy consumers all over the world, including here in the United States.
Return of ‘Drill-Baby-Drill’?
So where does this crisis go from here? These are still early days in Putin’s war. After 22 years in power, he knows how to play the long game.
Having already meddled in the 2016 U.S. presidential election, Putin has now helped revive “drill-baby-drill” as a campaign theme in the 2022 midterm elections. Never mind that the U.S. already is the world’s largest oil producer and would benefit further from a cut-off of Russian petroleum exports. No, the real point of this rallying cry is to spread the lie that rising fossil fuel prices are somehow the fault of cheaper renewables now starting to replace them. While the blame clearly lies elsewhere, this false political narrative may drive a further political wedge into the 2024 presidential election, where another Putin-friendly candidate may be lurking.
In the end, this energy gambit may prove to be Putin’s greatest miscalculation, however. In a free market such as ours, consumers feeling more pain at the pump or at the electric meter will respond by switching to faster adoption of electric vehicles and affordably priced renewable fuels. It won’t matter whether they see this as an act of patriotic duty or national security. “Putin-economics” alone will drive cleaner, smarter, and more climate-friendly purchasing decisions.
Putin Reminds Us of Planetary Threats
Finally, now that Putin has opened the door to a nuclear conflagration – both by threatening use of nuclear weapons and attacking an operating nuclear power plant – he has sounded the alarm about the perilous state of the planet itself. By reminding us that nuclear war and runaway climate change may yet doom our planet, Putin has given the rest of us new resolve to complete the phaseout of fossil fuels as soon as possible.
As a new assessment from the Intergovernmental Panel on Climate Change makes clear, we have a “brief and rapidly closing window to secure a livable future.” Let’s not blow it!
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