Climate is the Furthest Thing from Putin’s Mind…Or is it?

Amid a plethora of speculation about all that is motivating the Russian president’s invasion of Ukraine, here’s my two cents to add….

Among the legion of demons rattling about Russian President Vladimir Putin’s head and spilling over in angry speeches purporting to outline why he’s invading Ukraine, climate change seems nowhere to be found.

And yet, as the world is transfixed by the sudden historic showdown in Europe, there’s a case to be made that the tectonic shifts of a changing climate and the wholesale energy transition needed to solve it may have played a role in the timing of Putin’s move to reshape the global power landscape.

I would put it this way: The world is finally, inexorably facing the challenge of climate change — perhaps too late, undoubtedly too slowly, yet nonetheless moving in earnest to address the problem. That will eventually bring wholesale changes in where we get energy and how we use it. A day when oil and gas, staples of Russia’s resource-extraction economy, are no longer the lifeblood of the global economy is now on the horizon, albeit still very far in the distance.

There’s a catch, though. As this transition gets underway, it has dawned on major oil and gas producers from Saudi Arabia to, yes, Russia, that a final golden age may be at hand for them. Western-produced supplies of oil and gas aren’t keeping pace with the still-persistent global demand. This could result in a world where petro-states, still eager and able to meet that demand, enjoy a feast of both rising prices and growing production. That’s precisely what many energy industry analysts say has been happening over the past year. Economies are rebounding from the Covid pandemic, while Western oil and gas producers remain tentative about expanding production.

It’s a massive opportunity for petro-states. But who knows how long it will last. And when it turns, it could be very ugly for the unprepared.

From the Persian Gulf to, no doubt, the Kremlin, petro-states are beginning to position themselves to survive a potential world of hurt as oil and gas peaks and begins edging downward. This will come as adoption of electric vehicles gains traction and renewable energy replaces gas and coal at the heart of the power industry. That’s true even if oil and gas remain in use for decades to come, as they surely will. At that juncture — and many believe it will come well within the timeframe Vladimir Putin plans to still be ruling Russia — petro-states could face falling prices and falling demand. Even a slight but steady downtick in both those at the same time would be disaster for nations heavily dependent on petroleum and gas production.

So some are preparing. Saudi Arabia and the United Arab Emirates are loudly touting plans to diversify their economies and overhaul their societies away from oil and gas, even as they aim to significantly ramp up oil production in the coming years to pay for this overhaul. They’re trying to make hay while the sun shines, including by boosting renewable energy production, from solar to nuclear and hydrogen. In the U.S., investors who lost hundreds of billions of dollars in shale oil and gas producers are now demanding better returns as shale companies also boost production.

Is it so crazy to think Putin calculated that the time is now to move on his ambition to build a new Russian empire? Yes, his plan may backfire — although even countries most opposed to his actions are going to great lengths to continue buying Russian oil and gas despite it all. But he may have worried his dreams would only get harder to realize later. His global clout may be at a peak. Unlike the Arab Gulf petro-powers, Putin’s mindset and Russia’s advantages lie with military force and raw power politics, not diversified trade and commerce. So he may have decided, as Arab Gulf states clearly have, that they are entering prime time, perhaps their last best chance to fortify their global position before the geopolitical landscape slowly shifts against them.

Something to ponder…..

And apologies for the digression from India, climate and the energy transition. I just fear the world will, quite understandably, continue to be sucked into urgent crises of the sort playing out in Ukraine without considering the possible underlying role of climate change and the massive transition of the global energy and agricultural systems needed to head it off. I saw this covering the Middle East and South Asia, where the undertow of ecological damage from a changing climate in countries like Syria, Afghanistan and Yemen is profoundly under-appreciated as a driver of their respective collapses.  

Indeed, one of the challenges India is facing, and will face much more intensely as global warming gains momentum, is this same expensive, exhausting and distracting undertow. It will be a profound challenge to build the economic and societal resilience necessary for maintaining the political oomph and public resources to transition the energy system away from coal. And, as I discussed in the last post, if it’s India’s problem, it is in no small way everyone’s problem.

With that, in my last post I promised to take this energy adventure from the global to the granular.

Where ever Putin’s exploits in Ukraine lead, and however much they push headlines about climate change off the front page and prime time broadcasts, climate damage will continue to mount and solutions are ever more desperately needed.

So that is what we will move on to when I next post….