Climate Change

Russia Wins in a Retreat on Climate Change

The petrostate prospers when fossil-fuel use rises, while higher temperatures help it in other ways.

Warming trend.

Photgrapher: Shepard sherbell/corbis/getty images

President-elect Donald Trump has signaled ambivalence about many policies, such as Obamacare and infrastructure spending. But on at least one issue, his attitude is crystal-clear: climate change. Trump has vowed to withdraw from the Paris agreement designed to limit fossil-fuel use, and presented himself as a champion of the coal industry. His transition team even demanded that the Energy Department make a list of names of employees who worked on climate change. U.S. national policy seems set for an epic shift away from alternative energy and carbon reduction.

That alone probably won’t be enough to change the planet’s course. The biggest carbon emitter, by far, is China, and all of the increases in emissions are coming from the developing world. Meanwhile, U.S. states and cities will continue efforts to curb carbon, and the steady improvements in solar and battery technology are unlikely to grind to a halt. But if other countries follow Trump’s lead, the nascent effort to beat back global warming could suffer big setbacks.

Who would win from a retreat in the war on climate change? Oil, coal and gas industries around the world, obviously, as well as coal-burning power companies. But the biggest winner probably would be another country: Russia.

Russia gains when anti-climate-change efforts falter because, first and foremost, it’s a petrostate. Oil and gas comprise the bulk of Russia’s exports:

Energy Dependency

Composition of Russia's exports in billions, 2013

Source: U.S. Energy Information Administration

These products also give Russia’s government most of its revenue:

Tight Grip

Oil and gas have accounted for some 50% of Russian budget revenue for the past decade

Source: Bloomberg calculations based on Finance Ministry data

Without oil and gas, Russia’s economy would be a shambles, and sharp declines in energy prices in the 1990s and again in the past three years sent its economy into deep recessions.

In the short run, more U.S. oil drilling and gas exports hurt Russia, because they help hold down global fossil-fuel prices. But in the long run, the much bigger danger to Russia comes from a permanent shift away from fossil fuels. Solar technology has been getting steadily cheaper. If solar electricity could be easily stored for night use and transportation, it would displace oil, gas and coal. The price of those commodities would crash and never recover, leaving Russia’s economy a wreck.

The main technological barrier to the end of the fossil-fuel age now is battery technology. Batteries are improving, but they’re still some years away from allowing electric cars and solar storage to take over the world. Currently, the U.S. government is using subsidies and research funding to push battery technology forward. If it turns away from the fight against climate change, that money is likely to either be canceled or to be allowed to lapse. Russia’s economic lifeblood will be a bit more secure.

Meanwhile, it’s possible that the U.S. will abandon efforts to curb carbon, and Europe, fearful of its companies losing their competitive advantage, will follow suit. Russia exports most of its fossil fuels to Europe, so fewer carbon restrictions in that region would help secure Russia’s main markets and keep Europe more economically dependent on its giant neighbor.

But won’t Russia suffer if climate change is allowed to proceed, just like all other countries? Actually, because of its geography, Russia is mostly insulated from the main risks of global warming, and could even benefit.

Much of Russia is covered in permafrost and tundra, making it unusable for farming and also an unpleasant place to live. Global warming could change that. Researchers at Germany’s Ludwig Maximilians University, estimate that warming temperatures could add more than 3 million square kilometers (1.15 million square miles) to Russia’s arable land. This is in stark contrast to most countries, whose farmland would shrink as the climate warms.

Climate change is also expected to melt a lot of arctic ice. Much of Russia is near or in the arctic, so this would open up navigation channels that have been closed for centuries. Russia spent years fighting wars with the goal of acquiring warm-water ports; now, rising temperatures may accomplish that goal, or something similar, without any shots fired. Melting ice and frost will also open up new fossil-fuel deposits for exploitation.

This doesn’t mean climate change holds no risks for Russia -- coastal flooding is a real danger, and melting permafrost might force the country to rebuild some existing infrastructure. But the point is that Russia probably has fewer downsides, and more potential upsides, from climate change than most other nations.

Russia’s president, Vladimir Putin, knows all this. For years, he downplayed the threat of climate change, although he recently seemed to have a conversion when he supported the Paris agreement. Though his true intentions are hard to decipher, it seems likely that a general turn away from fighting climate change will leave his country in a stronger long-term position, both economically and geopolitically.

So although many Republicans might think they would be helping the U.S. energy industry by treating climate change as a myth, they might be helping Russia even more.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Noah Smith at nsmith150@bloomberg.net

    To contact the editor responsible for this story:
    James Greiff at jgreiff@bloomberg.net

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