A Hotter Russia? Behind a paywall


Dennis Brasky
 

The cliché, avidly promoted by Moscow, is that Russia will be a relative winner in climate change, but a new book argues that the country will find itself in trouble.

https://www.nybooks.com/articles/2022/06/23/a-hotter-russia-klimat-thane-gustafson/

 

After Russia’s February 24 invasion of Ukraine, President Volodymyr Zelensky and countless ordinary Ukrainians entreated Europe to embargo Russian energy, which has long been central to European economies. The first rounds of economic sanctions placed on Russia by the EU were unprecedented in their scope and severity, but they excluded oil and gas—and did little to stop Russian aggression. Amid new revelations about Russian atrocities, the EU recently proposed fast-acting sanctions on the Russian oil sector. Natural gas, which is almost impossible to acquire on short notice, has not yet fallen under EU sanctions, but Russia has imposed its own countersanctions on European gas companies. Europe now finds itself at risk of an energy crisis, with all the economic and political consequences such a shortage entails.

Thane Gustafson, a longtime specialist on Russian energy, wrote Klimat: Russia in the Age of Climate Change before the invasion, when the Covid pandemic seemed the great unexpected event complicating every prediction. Yet with its focus on the future of Russia’s energy, grain, and metals markets, all of which have been reconfigured by the war and the new sanctions, Klimat could hardly be more timely. Gustafson argues that Russia’s days of hydrocarbon-funded might are numbered. Unfortunately, the end of this era will not come soon enough for Ukrainians, or for the planet.

Russia is warming 2.5 times as fast as the world on average, and the Arctic is warming even faster. The cliché, avidly promoted by Moscow, is that the country will be a relative winner in climate change, benefiting from a melting and accessible Arctic shipping route, longer growing seasons, and the expansion of farmland into newly thawed areas. Gustafson counters, with a dry but persuasive marshaling of facts, that in the redistribution of wealth and power that will result from climate change, Russia is doomed. After reading Klimat, Russia’s attack on Ukraine begins to look like the convulsion of a dying state.

About two thirds of Russia is covered in permafrost, a mixture of sand and ice that, until recently, remained frozen year-round. As permafrost melts, walls built on it fracture, buildings sink, railways warp, roads buckle, and pipelines break. Anthrax from long-frozen reindeer corpses has thawed and infected modern herds. Sinkholes have opened in the melting ground, swallowing up whole buildings. Ice roads over frozen water, once the only way to travel in some remote regions, are available for ever-shorter periods. The Arctic coast is eroding rapidly, imperiling structures built close to the water.

In 2020 the aging, poorly maintained cement foundations of a power plant storage tank in Norilsk split, pouring 21,000 tons of diesel into local waterways and threatening to contaminate the nearby Arctic Ocean. Public outcry led to the punishment of some of those responsible for the spill, but it wasn’t enough to make the Russian government take meaningful action on the root causes of the disaster, including climate change. The authorities remained more focused on the opening of the Northern Sea Route. The Arctic was the Soviet Union’s “treasure house,” as Gustafson puts it, the source of much of its oil, gas, coal, metals, and diamond reserves, and today Russia takes the same extractive rather than conservationist approach to the region.

Russia’s forests are the largest in the world, accounting for a fifth of Earth’s trees, but they are being grievously damaged by fire, drought, and disease, all of which are caused or exacerbated by climate change. Smoke has choked Siberian cities. During the 2019 fires that burned about 10,000 square miles of forest in Siberia, the Internet lit up with protest, and Russian singers and actors took part in a flash mob called “Siberia Is Burning.” President Putin sent in military units to help extinguish the fire, but he was soon rescued by rain. The problem was forgotten. As burning, dying, clear-cut forests become carbon producers rather than carbon sinks, they make the problem of climate change even worse. The same is true of melting permafrost, which releases methane, another potent greenhouse gas.

Putin has presided over an impressive expansion of Russian agriculture, with grain harvests almost doubled since the 1990s. Russia now makes far more money from agriculture than from arms sales; agricultural products are its third most lucrative export after oil and gas. The 2014 sanctions by Western countries in response to Russia’s annexation of Crimea only served to increase this trend, as Russian countersanctions on imported foods led to rapid increases in production.

In Klimat, Gustafson maintains that Russia’s agricultural exports and revenues will continue to increase until the end of this decade, with global warming of one degree Celsius improving Russian agricultural productivity. But in the 2030s and 2040s the rate of increase will diminish, because of harm to Russian crops caused by drought, heat waves, and torrential rain. Some of these difficulties may be counteracted by rising prices, as climate change compromises the world’s food supply, but Russia will also hit the limit of its supply of arable land. Two thirds of European Russia, the country’s most fertile agricultural area, is already too dry. Thawed permafrost, meanwhile, is sandy and infertile, and will not make good farmland. Russia will require more resources to produce the same amount of food. More aggressive tactics to increase production (e.g., heavy use of fertilizer) will ultimately cause acidification and erosion.

Despite climate change’s many frightening effects, it has produced less concern in Russia than has external pressure to reduce carbon emissions. Before the invasion, Russian companies with close ties to the outside world—those that were listed on foreign exchanges or that had significant assets abroad, such as metals companies, one of the most globalized branches of Russian industry—had become alarmed not necessarily by the state of the environment or by Russia’s position as the world’s fourth-largest emitter of greenhouse gases, but by potential financial losses if they failed to meet new environmental regulations.

The EU’s 2019 proposal to tax imports that did not conform to its emission standards threatened Russia’s access to its primary market. (The proposal, called the Carbon Border Adjustment Mechanism, was adopted in July 2021 and will become fully operative in 2026.) The most important markets affected will be gas, copper, and nickel, since Russia’s production of oil, unlike its consumption, does not use large amounts of carbon. Russia scrambled to find loopholes in the border tax, such as dubious recalculations of the carbon absorption of its forests. Some in Russia called for a domestic carbon tax or carbon trading scheme, but the government was more inclined to compensate companies for their losses.

It seems that there is almost nothing that will convince the current government to decarbonize. Hydrocarbons are the source of its power, in every sense; decarbonization would require a reinvention of the whole political system. Russia has the world’s largest oil and gas reserves, outstripping even Saudi Arabia. In 2019, before the economic upheaval caused by Covid, oil accounted for 44 percent of all Russian export income. Oil and gas revenues together made up 56 percent of Russia’s income from exports, contributing 39 percent of the federal budget.

Oil became a central part of the Soviet economy in the 1960s, after a successful effort to increase production. By the mid-1980s the Soviet Union was the world’s leading oil producer. In keeping with the practices of the Soviet command economy and its approach to natural resources and the environment—and as elsewhere in the world—oil production was wasteful and heedless of the future: resources were misallocated (for instance, heavy investment in single-industry towns in West Siberian swamps and tundra), and workers were pressured to meet high targets using low-quality equipment and primitive, inefficient techniques that damaged oil fields. The chaotic privatization process in the 1990s helped halve oil production. After Putin took office, he reconsolidated the industry under government control, both formal and unofficial, and in 2018 Russian oil production finally surpassed its Soviet peak.

But the long-term future of the Russian oil industry, like that of the Russian economy, looked dismal even before the new sanctions. West Siberia, long the country’s primary source of oil, is running low. The extraction of Arctic oil is already well underway, but it is expensive and relies in part on foreign technology that was sanctioned even before the invasion of Ukraine. The new sanctions are also causing backups in shipments that could eventually lead to a shortage of storage space, which could in turn require a slowdown in production.

As time goes on, Gustafson argues, the Russian oil industry will be more and more dependent on government tax breaks. A dwindling supply will lose value in a global market that is shifting to renewable energy. In Gustafson’s account, most of the factors that will determine the future of Russia’s oil exports lie outside its control: exhaustion of its most accessible oil fields, increasing difficulty and expense in reaching remaining sources, damage to oil infrastructure caused by climate change, and reduction in demand from the EU and later from Asia. But Russia’s choices have had some effect. Its invasion of Ukraine has vastly accelerated the timeline for this squeeze by prompting new sanctions and informal boycotts even as it drives the price of oil to over a hundred dollars a barrel. Putin can use these high prices to compensate for some of the economic losses caused by sanctions, and to further increase his personal wealth, but he can’t replenish Russia’s oil wells, refreeze permafrost, or stop the global adoption of renewable energy sources.

As the world tries to shift away from oil and coal, gas will likely function, for better or worse, as a “bridge” fuel; Gustafson’s previous book was titled The Bridge: Natural Gas in a Redivided Europe (2020)The Soviet Union left Russia with the world’s largest gas industry and largest gas reserves. Gas was, and remains, the country’s essential source of cheap domestic energy, the reason for the notoriously stifling heat of Russian residences in winter. Cheap gas is one of the crucial benefits that the state provides to keep its citizens content and to assist domestic industry. Unsurprisingly, this abundance leads to wastefulness. One way for Russia to greatly reduce its carbon emissions would be to make its buildings energy efficient.

Under Putin, Russia began producing gas from the Yamal Peninsula, making up for declining production in older fields. There will be no shortage of Russian gas, Gustafson judges, into the 2050s. The problem, again, may be on the demand side. Russia can ship natural gas to Europe at a lower cost than anyone else via pipelines, the easiest means of transporting it; the alternative, liquefied natural gas (LNG), can be shipped overseas but requires the construction of special terminals, an expensive, time-consuming process. Russia has spent a huge amount of money to develop new gas fields and pipelines for the European market—but that market was poised to decline even before the recent invasion, because of public pressure to reduce dependence on fossil fuels, especially Russian ones.

Much of the developing world sees natural gas as a cleaner, less polluting alternative to coal, an important concern given life-threatening levels of air pollution in China, India, and elsewhere. Most developing countries have also declined to join in sanctioning Russia; some are inclined to take its side, in part because of their dependence on Russian energy, arms, and other commodities, notably grain. (Russia and Ukraine together provide 15 percent of the world’s imported grain, and the current war is threatening food security in the Middle East and parts of Africa.) Russia was already trying to pivot its gas export business toward Asia, beginning with LNG shipments and a new pipeline to China. But Gustafson concludes that even if this means a growth in gas revenues from Asia to compensate for declining sales to Europe in the coming decades, this will not make up for the loss in income from oil, because of competition from Chinese coal and LNG sales from Australia and Qatar.

Sanctions and public outrage have now provoked a high-speed effort to quit Russian energy. The United States, which became the world’s leading hydrocarbon producer in the 2010s thanks to the “shale oil revolution” under President Obama, is shipping LNG to Europe to help the EU avoid dependence on Russia (but not on planet-destroying carbon emissions). When the US became a net energy exporter in 2019, it aspired to rival Russia in providing gas to Europe. Now that ambition has been achieved in the space of a month, and, according to the Financial Times, US shale companies are enjoying a “tsunami of cash.” There has been much acrimonious debate about the degree to which NATO expansion into Eastern Europe contributed to Russia’s invasion of Ukraine; perhaps US-Russian competition over energy provision to Europe ought to receive more attention.

If one views the Russo-Ukrainian war as a matter of energy politics, there are clear material as well as historical, political, and cultural reasons for Ukraine’s victimization. In March Gustafson told n+1 that Putin has long been “obsessed with Ukrainian gas,” making numerous unsuccessful attempts to gain control of the gas pipeline system that runs from Russia to Europe through Ukraine. In a chapter on the two countries in The Bridge, Gustafson called the Ukrainian-Russian gas relationship a “prolonged and difficult divorce.” In this sense, Gustafson said, Putin’s self-defeating behavior becomes “clinically understandable.”

Soviet gas came first from reserves in Ukraine, which is why Soviet pipelines were built there. When the Soviets reached the end of the Ukrainian reserves, they found new ones in West Siberia—but the gas continued to pass through Ukraine. Post-Soviet Ukraine—heavily reliant on Russian gas, politically independent but also impoverished and corrupt—charged Russia for the passage while skimming gas off as it traveled west. Some of this gas was used to heat Ukrainian households and businesses, while some went to oligarchs who then returned a portion of their ill-gotten gains to highly placed Russians.

The bonds of industry and corruption kept Ukraine tied to Russia, and the two countries were locked in a cycle of “conflict and collusion,” as Gustafson calls it. In the mid-2000s Russia began demanding a higher price from Ukraine for its gas, and Ukrainian buildings got colder. Price disputes led to repeated supply disruptions and political crises between the two countries. I was at an event in Odessa in the winter of 2007 that included both Ukrainian and Russian participants. In the chilly sanatorium that was being used as a conference center, the Russians complained incessantly about the temperature. “Why don’t you Ukrainians heat your rooms properly?” they joked. Their Ukrainian colleagues seethed in silence.

Anxious to cut out an increasingly recalcitrant Ukraine, Russia began constructing a new system of pipelines to Turkey, Germany, and Poland. The fifth and final pipeline, NordStream 2, was the first to attract widespread opposition from 2016 onward, owing to concerns about excessive European dependence on Russia for energy and increasing US-Russian tensions. Though Ukraine no longer relies on Russian gas, at least not gas piped directly from Russia (rather than passed through a European middleman), it opposed the construction. Ukraine’s revenues from pipeline transit amounted to about $1 billion a year—money that the country needed more desperately than ever with its fragile economy grievously damaged by the Donbas war that began in 2014. And without a pipeline going through its territory, Ukraine would seem to have no leverage at all over Russia.

Imperialism originates in a struggle for resources; the ideology justifying the brutality of conquest and control is secondary. Oil has been one of the most coveted resources of the modern era, but the oldest and most essential resource is food. Ukraine’s famously fertile “black earth,” desired by many invaders and colonizers over the course of the country’s history, may also be among the motivations for Russia’s new aggression. According to recent reports, Russia has been commandeering or destroying Ukrainian grain stores and making off with Ukrainian agricultural equipment, smuggling the stolen grain to Syria for sale in the Middle East. Gustafson points out that as shortages become more frequent, food will become an increasingly significant tool of geopolitical influence.

It will be a long time before Europe can break its reliance on Russian commodities. The transition to renewable energy requires fossil fuels for mining, construction, and shipping; aluminum and steel for solar panels, wind turbines, and electric vehicles; rare-earth metals for batteries. The Russian company Rusal, founded by the billionaire Oleg Deripaska, is the largest aluminum producer outside China. (Rusal denounced the Bucha atrocities, a startling move, and it previously supported carbon taxes and other climate-friendly measures. Both are signs of its global ties and concern about damaging its business relationships.) The Russian company Norilsk Nickel is the world’s largest refined nickel producer and a major copper producer, and Russia is one of the world’s leaders in palladium and platinum production.

Gustafson thinks that the increase in the price of metals for renewables will not compensate for Russia’s loss of revenues as fossil fuel prices and sales decline. Still, the need for these metals makes a full economic break with Russia unrealistic. In March the price of nickel rose 250 percent in two days, although official sanctions did not include Norilsk Nickel or its chairman, Vladimir Potanin, out of concerns about price shocks.

Economically, Russia has chosen to bet on the short game; the long game will be ruinous. Though Putin made substantial progress in modernizing Russia’s oil, gas, and agricultural sectors, and despite the striking success of Russia’s civilian nuclear power program, the country’s economic gains during the Putin era have been based on extraction rather than innovation, with the state dominating most industries. State control is being reinforced by the new sanctions, which make Russian business more dependent on the Kremlin and have led to an exodus of Western companies and a consolidation of their holdings in Russian hands. Russia’s failure to produce its own technology follows a pattern that is not simply Soviet but dates back to the pre revolutionary period. Russians have their own name for this phenomenon, calling their country a resursnyi pridatok, or “resource appendage.” Russia’s only major areas of technological innovation are in nuclear power and weapons.

Russia’s economic model has been extremely conservative, focused on accumulation. (Much revenue is also stolen, of course.) This meant failing to invest in development—and now much of that money is unavailable thanks to the freeze on Russia’s foreign currency reserves. Even before the new sanctions, Gustafson wrote that Russia’s “nest egg,” collected over twenty years, would soon run out. Like oil, it is not renewable. Meanwhile, fear of expropriation or persecution even among Russia’s richest and most powerful politicians and businesspeople means that much of the country’s money has been spirited away to offshore bank accounts. One study found that by 2015, rich Russians’ offshore wealth was about three times greater than net foreign reserves and roughly equivalent to all household financial assets in Russia. Much of that may have been frozen in the new sanctions on Russian individuals. But either way, it is not available to the Russian economy.

As Russia’s income declines, so will its ability to placate its population with cheap household gas and generous welfare policies. This will likely lead to social destabilization, exacerbated by the disruption and suffering caused by climate change and a weakening economy. The Russian war on Ukraine, meanwhile, has resulted in the emigration not only of opposition politicians and journalists but also of professionals, especially younger ones, who have skills marketable elsewhere in the world—for instance, IT specialists, who find it easy to work from safer, freer cities like Bishkek or Tbilisi. The scientists, activists, and businesspeople who might help Russia cope with climate change are also among those likely to emigrate. Klimat’s time horizon of 2050 is short, but Putin’s is even shorter: he is now almost seventy years old. After him will come the deluge, the wildfires, the droughts, the collapse.


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