Hot topic: how climate change will reshape Russia

The climate crisis is poised to alter the international order, predicts Thane Gustafson, author of Klimat: Russia in the Age of Climate Change. He explains why the global decline in demand for fossil fuels spells trouble for Russia – and beyond

By Luke Johnson

Luke Johnson is a Berlin-based journalist focusing on Russia and Eastern Europe

12 Jan 2023

Professor Thane Gustafson paints a grim picture of Russia in the near future: by the middle of the century, a large section of the country – 10 times the landmass of France – will become virtually uninhabitable as bridges collapse, roads twist and buildings sink.

Climate change has triggered the melting of permafrost – which isn’t frozen soil that magically becomes arable as temperatures rise, but a mixture of sand and ice that has been frozen for thousands of years and runs deep into the ground.

Even with that apocalyptic picture, melting permafrost isn’t the most alarming part of climate change for Russia. Rather, it will be the resulting global decline in demand for fossil fuels, as Gustafson, an energy expert at Georgetown University, argues in his recent book, Klimat: Russia in the Age of Climate Change.

Oil demand will decrease, gas demand will fall even more sharply and revenues from coal exports will ​​​​disappear, wreaking havoc on the country’s budget. ​​​​“What happens in Russia will matter very much to the rest of us,” he writes. “Russia is near the top of all the countries that stand to be affected by climate change.”

What happens in Russia will matter very much to the rest of us

Russian President Vladimir Putin’s unprovoked invasion of Ukraine has only accelerated the decline of gas exports, as European countries have moved to cut themselves off from Russian gas. “The Kremlin has effectively dropped a bomb on a huge investment and its consolidated market position in Europe,” Gustafson tells The Parliament over Zoom. “Geopolitics has trumped economics.”

While Russia might like to believe it has options in piping gas to China – thousands of kilometres further away than Europe – the Kremlin has wiped out its leverage. “The Chinese are saying: ‘First of all, we can’t rely on you guys. And second, where’s your market leverage? So come back and see us in 10 years, we’ll talk about it,’” Gustafson says.

Russia is a fossil fuel economy. It has the largest reserves of oil and gas in the world, exceeding even those of Saudi Arabia. In 2019, the last full year before the Covid-19 pandemic cut demand, Russian exports of oil and gas accounted for $237.9bn (​​​​almost €230bn) and 39 per cent of the federal budget.

By 2050, Russia estimates that revenue from fossil fuel exports will drop by at least half, blowing a huge hole in the Russian budget and causing serious deficits, at about the time when Putin is gone from the political scene.

Revenue from fossil fuel exports has provided domestic stability for the Russian regime. In the early 2000s, Putin became popular as oil and gas prices rose; he used the money to pay off Russia’s debts to western countries, so it wouldn’t be politically beholden to them any more.

That money bolstered the Russian budget, as salaries and pensions could be paid reliably, unlike during the turbulent 1990s. Russia created a sovereign wealth fund, cushioning the blow of the 2008 financial crisis. Even accounting for some losses due to corruption, this revenue did make people’s lives better and grow the economy.

It is difficult to predict exactly how a sharp decline in this revenue would play out in Russia’s opaque political system, but it is safe to say the results could cause instability affecting Russia’s world position.

Meanwhile, Russia hasn’t developed much of an export alternative to fossil fuels for its economy. (Are there any Russian-made consumer goods in your house?) Gustafson says Russia will shift to a “soft” economy driven by information technology and services.

However, again, the war in Ukraine has wreaked havoc. More than 70,000 IT professionals have fled Russia since the war. (IT workers are technically excluded from the draft, however more have fled anyway.) Russia has also sharply restricted internet freedom in the past year, even prior to the invasion.

Along the same lines, the country hasn’t developed much of an alternative supply of energy. In 2019, renewables accounted for 0.15 per cent of Russia’s total energy generation, or about enough to power a small town.

Its efforts on climate change are also not politically salient. Russia’s previous climate envoy, Anatoly Chubais, not a member of Putin’s inner circle, resigned his role in March and left the country. (Bloomberg reported that his resignation was because of the Ukraine invasion, which he hasn't publicly commented on.)

Ruslan Edelgeriyev, a protege of Kremlin-appointed Chechen strongman Ramzan Kadyrov, is Putin’s chief adviser on climate change. Gustafson says he has “no background” in the environment, except that he was a former deputy minister of agriculture in Chechnya.

While Putin has come around to admitting that climate change is a particular problem for Russia, any efforts to deal with it have been mostly window dressing for an economy dependent on fossil fuels.

Speaking before an international audience in 2019, Putin pivoted from acknowledging the problems climate change posed to Russia, to an attack on global efforts to stem climate change, railing against ​​​​“populism, speculation, and … obscurantism” and a “path to nowhere”.

In some ways, the Russian people are fortunate as they​​ won’t be affected as much by the actual warming of the planet as many in the west. Although permafrost will melt and forest fires will burn longer, that will mostly happen in sparsely populated places.

The nightmare scenario for Russia won’t happen until the 2030s, Gustafson writes. The clean energy transition in the west will take years. Thanks in part to oil demand from Asia and Russia’s liquefied natural gas exports – which have increased to Europe amid sanctions – export revenues will probably remain solid in the short term.  

Still, Russia is not well prepared to face climate change as it’s gone all-in on hydrocarbons. Referring to global demand, Gustafson says: “It’s like a parade marching down the street. As it marches on into the distance, the sound of the music gradually fades.”

The consequences of climate change on Russia – the world’s largest country and the one with the most nuclear warheads – will ripple far beyond its borders.

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