Putin’s Net Zero World

Russian leader Vladimir Putin’s invasion of Ukraine represents not just a humanitarian and geopolitical disaster but also a major obstacle in the race to net zero.

Holding global governments to the commitments they make at global climate summits is hard enough. But what if there is a major global power inured to international criticism and whose narrow national interests are diametrically opposed to decarbonization? This month, the world has woken up to the fact that this nation exists, and its capital is Moscow.

To date, the assumption has been that the world’s most influential actors, whether they wield power in Beijing, Washington, New Delhi, Brasilia, or Berlin, could by and large be cajoled and threatened into pursuing policies that—at the very least—will not actively undermine global ambitions to bring global carbon emissions to “net zero” by 2050.

But Putin’s Russia is uniquely immune to global opprobrium, and Russia’s current leadership sees the global conversation on climate change as a direct threat to its own quest to recapture the status it lost when the Soviet Union collapsed in the early 1990s. Indeed, climate change is routinely portrayed as a conspiracy by the US-led liberal world order to keep Russia down.

Despite the fact that Russia is warming two and a half times faster than the global average, the strategic goals set out by Putin and his government for reattaining superpower status and reordering the post-Cold War world can only be fueled by hard currency earnings from oil and gas exports. “Russia’s overreliance on hydrocarbon production is a conspicuous vulnerability as the world shifts toward low-carbon sources of energy and carbon neutrality,” the Center for Strategic and International Studies, a US-based think tank, concluded in a report issued in January. The global climate movement, the author’s note, “pose[s] an existential threat to Russia’s economic model of hydrocarbon and mineral export.”

CARBON NON-NEUTRALITY

The salience of this contradiction has been thrown into stark relief by the Ukraine crisis. For domestic political and economic reasons, Russia has no intention of pursuing carbon neutrality.

But perhaps even worse, Russia has now demonstrated that a rogue international actor whose national treasury benefits from high energy prices can precipitate a collapse of decarbonization initiatives by acting out on the international stage.

The damage extends well beyond the fact that, as of March 1, global oil prices shot from just over $70 a barrel to over $103, driven largely by Russia’s military deployment. That alone could be enough to incentivize such behavior; every rise in global energy prices accelerates the flow of hard currency into Russia’s Sovereign Wealth Fund (SWF), which in turn provides the critical buffer the Kremlin needs to ride out Western sanctions.

The influence Russia is wielding, however, goes far beyond its national wealth. Consider the “downstream” results in Europe, where dependence on Russian natural gas has threatened to drive a wedge between NATO, the EU and the United States as they seek to respond to Russian aggression. The unity in the West has been notable to date, but it is unclear whether it would hold once supply shortages start in Central Europe and energy prices tick still higher further west.

The case of Germany is particularly alarming. Germany’s decision to partner with Russia in the construction of the nearly completed Nord Stream II natural gas pipeline was deeply controversial from the start, and administrations of every stripe in Washington have pointed out for decades that providing the Kremlin with the ability to turn off the taps in a crisis invited trouble.

That Germany has now chosen to suspend the pipeline is admirable. Yet the net effect will be another hit to the planet’s environment. That’s because, at the same time, Germany is mothballing its nuclear power industry. And the bottom line is this: there is no replacement for Russian oil supplies for Germany and nearby Central European states in the short term. The only alternative is to burn coal, a resource found in great abundance in the region that had been in steep decline in recent years as an energy source.

The impact of the Ukraine war and its higher energy prices may also curb the ambitions of Western democracies when it comes to climate policy. For leaders in Beijing and Moscow, there’s little concern about being turned out by the electorate due to higher prices for gasoline or food. But for Joe Biden, Boris Johnson, and Emmanuel Macron, high energy prices are a deeply political issue. President Biden railed against the invasion in his State of the Union speech Tuesday, and also said that controlling inflation will be Job No. 1 for 2022. The two, it should be noted, may be incompatible. And meanwhile, the politicians who stand to gain from the deteriorating popularity of current Western leaders are less likely to adopt carbon neutrality as a goal.

DEEP THAW

Russia faces as acute a climate crisis as any nation on earth. The thawing of its permafrost pours greenhouse gases into the atmosphere, undermining entire ecosystems of vast Arctic regions, and sparking forest fires and unleashing threats to species and ecosystems unparalleled in other lands.

Russia is the world’s fourth largest greenhouse-gas polluter despite the fact that its economy doesn’t even break the Top 10 in terms of GDP. (It ranks just behind Canada, #9, and South Korea, #10, in the World Bank’s 2021 league table). Yet the country emits about 5% of all carbon dioxide into the atmosphere each year. And calculating the impact of Russian hydrocarbons burned elsewhere would vastly inflate that negative impact.

But for the Kremlin, the melting of the polar ice cap and warming of previously frozen regions is a good thing. “An increase of two or three degrees wouldn’t be so bad for a northern country like Russia,” Putin told an international climate conference when he first came to office in the early 2000s. “We could spend less on fur coats, and the grain harvest would go up.” Maybe he was joking then, but his regime’s behavior seems to indicate that he wasn’t.

Since then, although Putin has sometimes taken the opposite stance on carbon emissions, the reliance of Russia (and Putin’s inner circle) on revenues from oil and gas imports has only increased. Years of talk about weaning the Russian state from hydrocarbon dependence has come to nothing.

According to S&P Global estimates, to balance its budget Russia needs to earn about $79 per barrel of oil produced. That means that, at the $103 price that pertains today, Russia’s export of about 11 million barrels daily is bringing a profit of about $600 million every single day into the national Treasury (or perhaps Putin’s bank account). Over the long term, this will not completely insulate Russia from the effects of western sanctions, which have been surprisingly robust so far. But Russia’s stamina will be unaffected by niceties like public opinion. Its citizens, by and large, will continue to have access to cheap fuel.

In reality, the incentives on climate change in the long term are no different for Russia than they are for any other country. Species survival, one would think, will ultimately be an irresistible motivator. But as the attacks on civilian areas of Ukraine now vividly demonstrate, autocrats define survival quite differently from the rest of us. For Putin, survival is not about human mortality; it’s about the maintenance of his own hold on power in Russia, the continued survival of its kleptocratic carbon economy, and his personal quest to restore Moscow’s ability to stoke fear when it’s useful on the international stage.