Russia’s war on Ukraine is pushing for sweeping changes in the energy mix of many countries, making green policies more of a prerogative of young urban cosmopolitan elites. Alessio Terzi believes climate desperation is understandable, but likely misplaced. The oil crisis of the 1970s is a good example of a global event that caused countries to adopt low-carbon solutions, such as France’s adoption of nuclear energy and the unprecedented push by Down to the bikes.
The ancient Romans believed that in the face of pressing concern, all other issues should be pushed into the background: “ubi maior, minor cessat”. These days, the horrific scenes of war coming out of Ukraine have captured Western attention and led to an unprecedented wave of economic sanctions against Russia. The push to break with the aggressive oil and gas producer has gone so far as to justify the reopening of old, polluting coal-fired power stations, contradicting an agreement struck at COP26 in Glasgow just months ago . The markets took notice and the price of carbon emissions in Europe fell by around 40% in just over a week, from an all-time high of around €100 a tonne. It would therefore seem at first glance that the energy crisis will inevitably delay the achievement of climate neutrality, once again pushing global warming into the tall grass. Climate desperation is understandable, and yet likely to be misplaced, if not myopic.
First, economists have long identified taxing carbon emissions as the key tool for tackling climate change. The fact that oil and gas prices have skyrocketed since the start of the war, and are expected to remain high, will ripple through the economy just as carbon taxation would have. . Simply put, it makes energy efficiency improvements much more urgent for both consumers and businesses. Moreover, it tips the balance in favor of investments in alternative energy sources, making them even more attractive compared to the current fossil alternative. For example, at current oil prices, each kilometer traveled in an electric vehicle is 3-4 times cheaper than in an internal combustion engine car, which is an additional incentive to accelerate their adoption. Similar considerations will apply to the installation of heat pumps for home heating, at a time when natural gas prices are at an all-time high in the UK, Europe and Asia.
Once the war is over (eventually, hopefully) and energy prices normalize, these structural changes will be entrenched. We know this is the case because this is not the first time this has happened. During the oil crisis of the 1970s, when the price of a barrel tripled in a short time, radical and lasting changes in the economy and society ensued. In an effort to break its dependence on oil and the blackmail of OPEC, France has taken an incredible leap towards nuclear energy. As a result, half a century later, it is still one of the industrialized countries with the lowest GHG emissions per capita (about a third of the United States in 2018). The Netherlands, being a small, flat country, responded to the oil crisis with an unprecedented push towards bicycles: a feature in which the nation is the world leader to this day. More broadly, in Europe and the United States, smaller cars gained a foothold, paving the way for the success of Japanese automobiles, with smaller engines and better fuel efficiency. It is no coincidence that to this day the country is one of the main exporters of cars and was already among the pioneers of hybrid technology in the early 2000s. Then, as now, critics pointed out that these solutions would take time, doing little to solve the problem of high energy prices in the short term. Then, as now, the short-term drivers led to significant long-term impacts that are evident to this day.
There is, however, a second, more political reason why the energy crisis will accelerate the green transition. The current tense situation with Russia will instil a sense of immediate urgency in reducing fossil fuel consumption, while climate action notoriously suffers from the problem of generating gains only in the medium to long term. As security expert Anatol Lieven noted in his 2020 book Climate change and the nation state, the fact that national security concerns and the shift to renewables align can be a boon. Beyond entrenched worldviews, the new reality means that green politics is no longer the preserve of young, cosmopolitan urban elites. In fact, you don’t even have to believe in climate science to break Russia’s energy dependence, including through major investments in alternative energy sources. This is especially important in countries where climate change mitigation has become a highly polarizing topic, such as the United States.
The fact that fossil fuel prices are skyrocketing and out of control creates the same incentive as carbon pricing to accelerate the green transition, but with the difference that it will cause more disruption in the short term. For example, commentators explicitly mention the possibility of some energy rationing next winter. A drop in economic growth and surges in inflation cannot be ruled out, with negative repercussions on purchasing power, public finances and social stability. More than a controlled green transition would have implied. Nevertheless, depending on their political views, citizens will see this either as a price to pay to protect liberal democracy or as something to be blamed on an aggressive imperialist pariah state. But whatever the case, it will not call into question the need to accelerate the withdrawal from the Russian economy, and therefore from fossil fuels. Whether in times of war or peace, the future will inevitably be green.
- This blog post expresses the views of its author, which do not necessarily reflect those of the European Commission, the LSE Business Review or the London School of Economics and Political Science.
- Image selected by Ernest Ojeh on Unsplash
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