Russia’s invasion of Ukraine is inextricably linked to the global energy crisis.

With wholesale gas prices already at extremely high levels, in part due to Russia’s actions, the attack on Ukraine has prompted widespread debate over how to respond.

As a major humanitarian crisis has unfolded, there have also been fears that climate action could be relegated by world leaders to an afterthought.

Concerns over energy security are particularly acute in Europe, which is heavily reliant on Russian exports of coal, oil and gas. Two major narratives have emerged in response.

Many, including leaders from the European Commission’s Ursula von der Leyen to the UK’s Boris Johnson, have emphasised the need to accelerate the roll out of clean energy technologies.

Some politicians have coupled this with calls to boost domestic fossil fuel supplies, so as to reduce the need for Russian imports. Meanwhile, climate sceptics have made domestic oil and gas their sole focus, in some cases going so far as attempting to argue that clean energy is part of the problem.

In this Q&A, Carbon Brief rounds up the best charts, analysis and commentary on what Russia’s invasion of Ukraine means for energy, commodities and, ultimately, climate action.

Why does Russia matter for global energy supplies?

Russia is a major part of the global energy system thanks to its huge fossil fuel resources. It is the world’s third largest oil producer after the US and Saudi Arabia, accounting for 12% of global output, and the second largest gas producer after the US, responsible for 17% of the global output.

Russian energy supplies are particularly important in Europe, which receives around 70% of the country’s gas exports and half of its oil exports, according to official US data.

The rest of Russia’s gas exports go to Belarus (8%), China (5%), Kazakhstan (5%), Japan (4%) and other parts of Eurasia, Asia and Oceania. Its remaining oil exports go to China (31%), South Korea (6%), Belarus (6%), Japan (2%), the US (1%) and other parts of Eurasia, Asia and Oceania.

More than a third of Europe’s gas supplies come from Russia, according to the New York Times. It has produced a map showing how Russian gas exports are received across Europe.

While Europe is heavily reliant on Russian fuel supplies, Russia is in turn reliant on revenues from fossil fuel sales, which make up more than two-fifths of government revenue. According to Javier Blas writing for Bloomberg, the UK, EU and US collectively spend more than $700m a day buying Russian oil and gas.

Over the past three decades, the European Union has received nearly 40% of its gas and more than a quarter of its oil from Russia, the New York Times reported in a separate piece.

While some countries, such as Poland and France, have decreased their dependence on Russian fuel over this time, others, such as Germany and Italy, have become more reliant, according to New York Times analysis using Eurostat data.

German chancellor Olaf Scholz said on Tuesday that gas accounted for a quarter of the country’s energy mix, with more than half of it coming from Russia, according to the Financial Times. The newspaper reported:

“Scholz insisted, however, that Germany would wean itself off its addiction to gas. It would be carbon-neutral in 25 years, he said, and would expand solar and wind power capacity ‘so we can produce steel, cement and chemicals without using fossil fuels’.”

The UK is much less reliant on oil and gas from Russia than the European Union, the Guardian reported.

The UK sources less than 5% of its gas from Russian imports, instead relying largely on dwindling North Sea reserves and supply from Norway, the publication said, drawing on analysis from the Oxford Institute of Energy Studies.

Some publications have speculated on the risk that the Ukraine crisis could disrupt gas supplies to Europe, either as collateral damage from conflict or via a political move from Russian president Vladimir Putin.

The Times on Tuesday reported on comments from Shell, which warned that Europe needs to “make urgent reforms to address the vulnerability of its gas supplies”.

On Thursday, Reuters reported that Spanish and Portuguese officials had called for Europe to coordinate managing its energy supplies after Russia’s invasion “heightened fears of disruption”.

Prof Thijs Van De Graaf, an associate professor of international politics at the Ghent Institute for International and European Studies at Ghent University, Belgium, examined the risk that Russia will “turn off the gas taps” to Europe in a detailed Twitter thread.

Russia could afford to cut gas supplies, he said, noting that Russia earns five times more from the export of oil than gas and that it holds $630bn in foreign reserves. Despite this, it is “highly unlikely” that Russia will cut gas supplies to “Gazprom’s biggest customers in Europe”, he said.

“Russia cannot simply switch its gas exports to, say, China since it lacks the pipeline infrastructure,” he added.

On the risk of warfare disrupting supplies, he pointed out that most gas transit pipelines do not run through the Donbass region, an area central to the conflict in south-eastern Ukraine.

However, as the crisis escalates, “gas pipelines through Ukraine could be disrupted”, he said. But “some of the Russian gas exports to Europe could then be rerouted to other pipelines”, he added.

It is also worth noting that Russia has been reducing its gas delivered to Europe for months, he added, limiting exports “to the volumes that it is contractually obliged to deliver”.

Although Europe is the main destination for Russian energy exports, Russia has increasingly turned to China for energy and general economic cooperation. Some UK media outlets have suggested that China could “throw Russia an economic lifeline” to “weather the storms of sanctions” by, for example, buying more energy from it.

An official at Russia’s Ministry of Energy said last week that Russia planned to increase its coal exports to China to 100m tonnes, according to Russian news agency Tass.

In early February – three weeks before the Ukrainian invasion – the two nations inked new oil and gas deals worth an estimated $117.5bn (£86.6bn), including a 30-year gas contract that would boost Russia’s gas supply to China by “a quarter”.

Reuters described Russia’s agreement to the deal as “bolstering an energy alliance with Beijing amid Moscow’s strained ties with the West over Ukraine and other issues”.

Gazprom – which signed the deal with a Chinese state-run energy company and has a monopoly over the country’s gas exports – said that “as soon as the project reaches its full capacity”, Russia would supply China with 48bn cubic metres of gas per year through the new pipeline and the existing “Power of Siberia” system. (The latter is not connected to pipelines that send gas to Europe, Reuters said.)

Russia and China are currently discussing four more gas pipeline projects. Liu Qian – executive deputy director from the Centre for Russian and Central Asian Studies at the China University of Petroleum in Beijing – told China Chemical Industry News that those projects included “Power of Siberia 2”, which would connect Russia with China via Mongolia.

He also mentioned a far eastern route from Russia’s Vladivostok to China – which the latest gas deal is presumed to be part of – and a yet-to-be-constructed western route connecting Russia’s Siberia with China’s Xinjiang. The last out of the four, according to Liu, was a “supply boost” to the “Power of Siberia” system to bring up its annual exports from 38bn to 44bn cubic metres.

How is the invasion affecting energy markets and consumer bills?

Many publications have reported on how the crisis is affecting energy markets and bills.

The Financial Times on Thursday reported that European gas prices temporarily increased by almost 70%, while crude oil rose above $105 a barrel for the first time since 2014, “after Russia’s invasion of Ukraine triggered fresh worries about global energy supplies”.

News of the invasion briefly sent Brent crude, the benchmark against which most other crude grades are priced, up 9% to $105.79 a barrel, the Financial Times reported.

However, Brent prices settled at $99.08 a barrel after US president Joe Biden announced that his latest sanctions against Russia would focus on the finance sector rather than the energy sector, the newspaper said.

(Reuters on Wednesday reported that US officials were reluctant to target Russia’s energy sector “due to concerns about inflation and the harm it could do to its European allies, global oil markets and US consumers”.)

Amrita Sen from the UK consultancy Energy Aspects told the Financial Times that “the fear of supply disruptions had gone away” after Biden decided not to impose energy related sanctions on Russia. (See: How are sanctions affecting energy and other commodities?).

“The west can’t afford energy sanctions given where oil and gas prices are,” she added.

Reuters story on Thursday reported that Greece has urged France, which currently holds the EU presidency, to call an emergency meeting of energy ministers to discuss a collective response to surging energy prices “further exacerbated by Russia’s invasion of Ukraine”.

In a letter, co-signed by Bulgaria and Romania, Greek energy minister Kostas Skrekas said the energy crisis had a “destructive impact” on the life of European citizens and industries.

His letter to French ecological transition minister Barbara Pompili said:

“This is a crisis situation, which requires an EU level response…In this light, we would ask the French presidency to organise an extraordinary meeting of the Council of Energy Ministers as soon as possible.”

Meanwhile, Reuters data showed that UK wholesale gas prices rose by as much as 60% on Thursday, amid Russia’s invasion, before dropping back to lower levels on Friday.

People in much of Europe and North America have already been facing rising energy costs as fuel prices have soared in recent months following the lifting of Covid restrictions.

With growing tensions over Russia’s threat to Ukraine, there has been speculation about how this will exacerbate the on-going energy crisis and impact consumers in countries around the world.

In the UK, up to 22 million households could already see a 54% spike in energy bills – from £1,277 to £1,971 – on 1 April when the energy price cap is raised.

Following the Russian invasion, many publications quoted figures from Martin Young, an analyst at the banking group Investec, who has stated that the energy price cap could hit £3,238 when it is next revised this autumn, if wholesale prices remain elevated. The publications cited concerns that Russia could “weaponise” its resources by restricting gas flows and driving up wholesale prices.

Simon French, chief economist at the investment bank Panmure Gordon, wrote a Twitter thread critiquing this “breathless reporting”, noting that the data required to calculate the price cap is currently lacking.

However, he noted that, while these initial figures were “little more than educated guesswork”, there could still be “considerable cost of living implications” arising from the situation in Ukraine.

Petrol and diesel prices could also be significantly affected, with UK pump prices already at record levels. In the US, where gasoline prices have hit their highest point in eight years, president Joe Biden has made it clear that more price increases are likely on the horizon. “Defending freedom will have costs for us as well, here at home,” he said.

According to the American Automobile Association, the average cost of petrol in the US has already hit $3.54 a gallon, up from $2.66 a year ago. That price is now set to rise further, with publications citing analyst estimates of $4 or even $5, due to the invasion of Ukraine.

However, this remains speculative, and the US administration is weighing up the option of tapping into the emergency supply kept in the nation’s Strategic Petroleum Reserve, in an attempt to bring down prices. But this would likely only have a limited impact.

How could Europe reduce its reliance on Russian energy?

Broadly speaking, commentators, analysts and politicians have advanced two different narratives around how Europe’s energy system should respond to Russia’s invasion of Ukraine. Both narratives are, at least outwardly, about reducing Russia’s grip on European energy supplies.

The first emphasises the need to exploit domestic fossil-fuel resources as a means of reducing reliance on Russian exports, while the second argues for accelerating the shift towards more efficient and cleaner energy supplies in order to move away from fossil fuels altogether.

Leaders including the European Commission’s Ursula von der Leyen and the UK’s Boris Johnson have emphasised both clean energy and alternative fossil fuel supplies (see: What are politicians saying about the energy response to the crisis?).

Crucially, however, these alternatives operate over different timescales in terms of how quickly they could cut European demand for the coal, oil and gas imported from Russia.

In the UK, as Carbon Brief reported this week, the government’s advisory Climate Change Committee recently noted that when new projects in the North Sea are given a development licence, it takes an average of 28 years for them to actually start producing oil and gas.

Similarly, when the UK was seriously considering developing a domestic shale gas industry, it was widely expected that it would take a decade to scale up, as the Guardian reported at the time.

In contrast, Europe could “rapidly reduce its gas dependency” by investing in energy efficiency, the electrification of heat and renewables, according to an article in EurActiv by Michaela Holl, senior associate at German thinktank Agora Energiewende, and Jan Rosenow, director of the European programme at the Regulatory Assistance Project (RAP).

Snap analysis from the Institute for Energy Economics and Financial Analysis (IEEFA) argued that Europe should focus on diversifying its energy supplies with more clean energy rather than simply repeating its historical focus on diversifying the suppliers of its fossil fuels.

The Washington Post reported that the European Commission was due to next week launch “a strategy to break free from Russian gas” by cutting demand for the fuel by 40% by 2030 – a reduction larger than current supplies from Russia.

EurActiv said the commission would launch its long-planned communication on 2 March, carrying a leaked draft of the document, which says:

“The best solution for more energy resilience, less dependence from gas imports and lower prices is the acceleration of the implementation of the European Green Deal. Rapid implementation of the Fit for 55 measures and in particular investments in renewables and energy efficiency is the best answer for the future.”

In an analysis posted on Twitter, Dave Jones, global programme lead at thinktank Ember, noted that the Netherlands and Spain were able to cut gas demand in their electricity sectors by 22% and 17%, respectively, in just two years, between 2019 and 2021, by building more renewables.

Speaking to the Independent, Suzana Carp, executive director of NGO Carbon-Free Europe, said:

“The alternative to importing fossil fuels is the building up of autonomous energy sources at a national and EU level. I also think it will advance hydrogen projects and other zero-carbon fuels. The mentality has started to shift. It’s no longer business as usual. We’ll see a move towards renewable, nuclear, and zero-carbon fuels that gives Europe the autonomy it needs.”

Writing on TwitterNikos Tsafos, Schlesinger chair at the Center for Security and International Studies (CSIS), argued that there is “no doubt” that the war in Ukraine “will reshape Europe’s tolerance for relying on Russian energy”.

Tsafos made the case for “thinking big” in response to the crisis, suggesting ideas including an effort to make and install 100m heat pumps across Europe. Rosenow explained on Twitter how replacing gas boilers with heat pumps would cut gas demand, even if the electricity driving them was generated using gas.

An article for New Statesman is titled: “Net-zero is the energy answer to Russian aggression.” It argued that “green energy, not gas, is the future”. For UnHerd, an article argued: “In the longer-term, the environmental agenda is perfectly aligned with the security agenda.”

Similarly, BusinessGreen editor James Murray wrote: “Clean technologies are peace-keeping and patriotic. Putin hates them. As such they need to be deployed at a pace and scale that is completely unprecedented in the entire sweep of human history. Our climate security, our energy security, and our national security depends upon it.”

Turning to the second major narrative, calls to expand domestic fossil fuels are exemplified – and amplified – in the UK by the climate-sceptic lobby group Net Zero Watch, which is a campaigning arm of the Global Warming Policy Foundation.

In a press release, the lobbyists said fracking for domestic shale gas in the UK could “substitute for Britain’s rapidly rising imports which are increasingly dependent on Russia’s European gas flows”. (Less than 5% of UK gas supplies come from Russia.)

The group also repeated an inaccurate claim about the amount of shale gas under the UK, ignoring more recent evidence suggesting the amount that could be economically extracted might be equivalent to less than five years of the country’s annual demand.

Energy UK chief executive Emma Pinchbeck took to Twitter to remark on the link between UK and European gas prices, writing: “Highlights why more UK production wouldn’t really help bills – we are exposed to the wholesale price and UK gas is sold in European and global markets. We need to reduce UK dependence on gas.”

The CCC made similar arguments this week, saying it was a “myth” more that UK oil and gas drilling would solve high energy prices – calling the idea “naive” – due to the delay in increasing production and the international nature of markets for energy. (Much of the UK’s fossil fuel output is exported.)

UK government ministers have given strong backing to continued offshore oil and gas production but, as the Times reported, they too have “dismissed suggestions that increased North Sea production could bring down prices”.

(The government’s long-standing policy has been to “maximise economic recovery” of oil and gas but North Sea output has fallen “largely because of geology” as its resources are used up, according to Tsafos.)

Daily Telegraph editorial said the UK should build new nuclear in “record time”, start fracking and “allow the North Sea’s gas fields to be fully exploited”. Many other right-wing commentators – and a small number of Conservative politicians – have also argued in favour of the purported benefits of fracking in recent days.

In the US, some have gone even further, with a comment for Bloomberg calling shale gas “America’s most powerful weapon against Russian aggression”.

In response to calls for a “rethink” on the UK’s net-zero target during the current energy crisis, Simon Clarke MP, chief secretary to the Treasury, has said this would be “irrational”.

In related developments in Germany, Mark Helfrich, opposition Christian Democrat spokesperson for energy policy, reportedly told die Welt that the country should pause its coal phaseout in response to the crisis, the German news agency dpa reported, while Italy is also reportedly considering a temporary reopening of coal plants.

In an article for RealClear Energy, the climate-sceptic commentator Rupert Darwall argued – without evidence – that renewables increase Europe’s reliance on Russian gas.

On the contrary, wind power alone generated enough electricity in the EU last year to avoid the need to buy gas costing some €56bn, with another £15bn of gas avoided in the UK.

Alternative overseas sources of fossil fuels for use in Europe could include major exporters of liquid natural gas (LNG) such as the US or Qatar, though as Reuters reports, none of these individually are large enough to completely replace Russian supplies.

Could Europe completely wean itself off Russian fossil fuels?

Beyond the broad narratives around how the European energy sector should respond to the invasion, analysts have started to ask if Europe could completely wean itself off Russian fossil fuels.

The answer varies widely given European countries – Ukraine included – have different levels of reliance on Russian supplies of coal, oil and gas, as well as differing access to alternatives.

Moreover, the timescales of any response are an important consideration, whether dealing with a temporary disruption due to the conflict itself, a sudden and complete interruption due to sanctions or Russian action, or a more gradual effort to cut Russian imports over time.

The European Commission has been at pains to argue that the bloc could survive a full-blown, immediate shut-down in Russian gas deliveries – a point supported by two recent analyses reported separately by the Guardian and Bloomberg.

(The Bruegel study reported by Bloomberg suggested that EU gas demand would have to be cut by 10-15% to make it through next winter, the outlet said. But the study said the EU “can manage”.)

Others have argued that a sudden stop is unlikely to happen. In the Spectator, Wolfgang Münchau, former co-editor of Financial Times Deutschland wrote:

“[W]hen it comes to gas, [Putin] would be unlikely to cut the flow. Western Europe is dependent on Russian energy and this dependency is a source of Putin’s power. Europe would, of course, suffer [if he cut off supplies], but it would then be forced to accelerate moves to reduce dependence on Russia.”

Still, analysts have been carrying out thought experiments on what would happen, with a focus on gas, because at least in general terms oil and coal are easier to import from elsewhere.

(Consultancy WoodMac said an end to Russian coal exports would cause a “price shock to global markets and a coal shortage in Europe”. Bloomberg columnist Javier Blas pointed to spare oil production capacity in Saudi Arabia and the United Arab Emirates but argued that an embargo on Russia could a military response from Putin.)

Meanwhile, Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air (CREA), posted analysis on Twitter describing exactly how much clean energy Europe would need to deploy to completely wean itself from Russian gas.

Myllyvirta says Europe could end Russian gas imports by building around 370 gigawatts (GW) of wind and solar at the same time as rolling out heat pumps, enough to boost clean power generation in the EU and UK combined by around 40%.

He suggested this could – at least, in theory – be delivered within a “few years”, although others note that permitting for renewables is a more significant barrier to expansion than government ambition.

Another Twitter thread from CSIS’s Tsafos asked if Europe could live without Russian gas “right now”. Pointing to import capacity for LNG and the size of the global LNG market, among other factors, Tsafos concluded that “it’s very tough” to replace Russian gas overnight.

Writing for Bloomberg, climate economist Gernot Wagner argued that the EU could go “cold turkey” on Russian gas. He wrote: “Ripping off the Band-Aid now would take uncertainty off the table. It would mean front-loading many of the investments that would need to happen regardless.” He concluded:

“Addressing climate change justifies many of these costs, amounting to nothing short of a climate-war mobilization. Add an actual war for democracy in Europe on top, and cutting off Russian gas should at the very least be on the table.”

The aftermath of the Russian invasion has seen some utility firms looking to reduce their exposure to fossil fuels, with Italian electricity generator Enel reportedly moving to build battery storage sites instead of converting two coal plants to use gas.

Looking at a historical precedent for major shifts in energy use after a crisis, Andreas Graf of thinktank Agora Energiewende tweeted a chart showing how Sweden shifted away from oil in the 1970s.

What are politicians saying about the energy response to the crisis?

Politicians across Europe and the US have been united in their condemnation of Russia’s invasion of Ukraine. With the crisis inextricably linked to the rising cost of energy, many have also looked to reassure their own populations about energy prices and supplies.

In Europe, ministers have been quick to emphasise the continent’s energy security and independence from Russian gas.

Such rhetoric has been accompanied by talk of boosting renewable power, as well as domestic fossil-fuel production.

Following a meeting of the Group of Seven (G7) allies – Canada, France, Germany, Italy, Japan, the UK and the US – to discuss the situation, UK prime minister Boris Johnson said they “agreed to work in unity to maximise the economic price that Putin will pay for his aggression”. He told parliament:

“And this must include ending Europe’s collective dependence on Russian oil and gas that has served to empower Putin for too long.”

In a statement released on the brink of the invasion, US president Joe Biden said that:

“Through his actions, President Putin has provided the world with an overwhelming incentive to move away from Russian gas and to other forms of energy.”

UK energy minister Kwasi Kwarteng made similar remarks following a conversation with his US counterpart Jennifer Granholm.

Leaders in the UK, EU and US have also welcomed Germany’s decision to halt certification of the Nord Stream 2 pipeline from Russia.

German chancellor Olaf Scholz stopped the approval process for Nord Stream 2 on the day Russian forces moved into separatist-controlled regions of Ukraine. After weeks of avoiding even mentioning the controversial pipeline’s name in speeches, the chancellor cited a “fundamentally different” situation.

Ukraine’s foreign minister Dmytro Kuleba welcomed the move as “a morally, politically and practically correct step”, while former Russian president Dmitry Medvedev suggested it would result in European gas prices doubling.

European Commission president Ursula von der Leyen dismissed this claim as “complete nonsense” in an interview with CNN:

“Today, not a single drop of gas is floating through Nord Stream 2.”

As Russia began sending troops into Ukraine, von der Leyen said a transition away from fossil fuels was the solution:

“We have to diversify our suppliers and massively invest in renewables. This is a strategic investment in our energy independence.”

In a speech from the previous week, Von der Leyen said that “even in [the] case of [a] full disruption of gas supply by Russia we are on the safe side for this winter,” adding that “in the medium and long term, we are doubling down on renewables”.

EU climate chief Frans Timmermans took to Twitter to express similar sentiments. He wrote:

“Let’s now dash into renewables at lightening speed. Our own, clean, cheap, endless energy. The faster we move, the sooner we reduce dependency on others, the stronger we stand together.”

According to EurActiv, lawmakers in the European Parliament from both the left and right of the political spectrum agreed on this need to expand renewables in response to the wider energy crisis. Similar messaging has also come from politicians in other European countries.

In the UK, Kwarteng tweeted a message in which he emphasised that the nation needs to generate more renewable and nuclear power, as well as backing North Sea oil and gas, points he repeated in a longer Twitter thread that also said: “the best way to keep energy bills down is through energy efficiency upgrades so we use less gas”.

Kwarteng’s messages had clear allusions to the geopolitical situation, as he emphasised the need to “reduce our exposure to volatile global gas prices and become energy self-sufficient” as well as avoid increasing “foreign imports” of fossil fuels.

This came against a backdrop of some Conservative MPsat least one minister and various commentators in the right-leaning media calling for the nation to start “fracking” in order to provide energy security. This, in turn, is linked to an orchestrated backlash by a small grouping of Conversative politicians and their media supporters against the nation’s net-zero target.

German chancellor Scholz has also emphasised that Germany will be carbon-neutral within 25 years, meaning ending its reliance on fossil fuels and a significant expansion of solar and wind power capacity

However, for the time being, economic minister and Green politician Robert Habeck has said the government can provide energy security without Russian fossil fuels by using fossil fuels from other countries instead. “We will have to buy more gas, but also coal from other countries,” he told broadcaster ZDF.

In the longer term, Habeck “has described the accelerated capacity expansion for renewable energy as a key element in making the country less dependent on Russian fossil fuel supplies”, reported Reuters. It said Habeck’s coalition colleague Christian Linder, of the Free Democrats (FDP), called renewables the “energy of freedom”.

In Italy, Reuters reported that energy transition minister Roberto Cingolani said that the situation in Ukraine had accelerated the need for structural changes to Europe’s energy markets, including gas storage. His nation had also moved to expand renewables in a bid to avoid future impacts on its energy supply.

Beyond energy security, politicians have also commented on the links between the invasion of Ukraine and energy prices, which have already been escalating for months. In the UK, Johnson told parliament that Russia’s actions would “have global economic consequences”, noting that oil prices had already risen “strongly”:

“The government will do everything possible to safeguard our own people from the repercussions for the cost of living.”

This has been a key issue in the US, where Republicans have attempted to blame rising energy prices on Democrat president Joe Biden and his climate policies, despite increases in domestic fossil fuel production during his time in office.

Amid these tensions, Politico reported that Biden had “few options for keeping Russia’s invasion of Ukraine from inflicting pain for Americans at the pump”.

As prices increased, the US president said he could release oil from the nation’s strategic reserve to alleviate price inflation, stating that the administration would:

“[Use] every tool at our disposal to protect American families and businesses from rising prices at the gas pump.”

How are sanctions affecting energy and other commodities?

The sanctions imposed by the US and UK are among the most severe to date. Since 2014, the US and its allies have imposed sanctions, travel bans and asset freezes aimed at Russia, including individuals and companies, reported the Washington Post.

Sanctions are restrictions designed to curb the influence of governments, companies or individuals, and operate through limits on trade, banking or access to financial assets. Governments, for instance, can lose access to capital or debt markets, individuals could face travel bans and industries can be blocked from importing or exporting certain goods and services.

As the Post reports, Russia has been hit with more US sanctions in the last decade than even Iran. The first round of US sanctions began in 2014, ordered by then-president Barack Obama when Russia annexed Crimea, followed by another round in 2016, when US intelligence agencies “concluded that Moscow interfered in the 2016 presidential election, won by Donald Trump”.

The EU, too, slapped sanctions on Russia’s financial, energy and defence sectors in response to the Crimean-annexation.

However, some experts say that sanctions are not fast-acting enough to influence the events unfolding. Prof Michael McFaul, a political scientist at Stanford University and a former US ambassador to Russia, tweeted that “sanctions will take months and years to have any impact on Putin’s calculus”.

On Thursday, US president Joe Biden announced that the US and its allies would be “imposing severe and immediate economic costs on Russia”. These included sanctions on several of Russia’s largest financial institutions, restricting them from making transactions using the US dollar, freezing their US assets and prohibiting US citizens from dealing with those banks.

The announcement also included wide-ranging sanctions aimed at severing “Russia’s access to cutting-edge technology”, including restricting their access to a wide range of technologies including “semiconductors, telecommunication, encryption security, lasers, sensors, navigation, avionics and maritime technologies”.

UK prime minister Boris Johnson also announced new, severe sanctions on Thursday, CNN said. These include freezing the assets of Russian state bank VTB and “100 individuals and entities…’that support Putin’s war machine’”.

On Thursday, the UK also banned Russia’s national airline, Aeroflot, from landing in Britain; in retaliation, British airlines were banned on Friday from entering Russian airspace, BBC News reported.

However, current sanctions do contain significant exemptions, especially for energy and agriculture. US president Joe Biden, while declaring the sanctions package, said:

“…we specifically designed [them] to allow energy payments to continue. We are closely monitoring energy supplies for any disruption. We have been coordinating with major oil producing and consuming countries toward our common interest to secure global energy supplies.”

(Analysis from the Kiel Institute suggested trade sanctions ending gas exports from Russia would have the most significant impact on the country’s economy, taking 3% off its GDP, and oil exports some 1%.)

Additionally, the Office of Foreign Assets Control under the US treasury department issued several general licenses allowing certain transactions to continue. For instance, it “authorises, subject to certain conditions, transactions that are ordinarily incident and necessary to: the exportation or reexportation of agricultural commoditieswhich include fertilisers and seeds.

Reuters reported that Russia has said the sanctions “would cause problems”, but “would be solvable”. The country also vowed to “impose retaliatory sanctions” on the west.

Oil and gas makes up a fifth of Russia’s economy and half of its earnings from exports. As such, many EU, UK and US sanctions against Russia target the country’s oil and gas infrastructure and exports.

A particularly notable sanction against Russia’s oil and gas infrastructure involves the Nord Stream 2 pipeline – a 1,200km pipeline running under the Baltic Sea, which was built to take gas from Russia to Germany without transiting other countries.

Nord Stream 2 cost more than £8bn to build and was completed last September, according to BBC News. The pipeline runs parallel to the Nord Stream pipeline and would double its capacity to 110bn cubic metres of gas per year if approved, said ABC News.

However, there have been political concerns over the approval of the Nord Stream 2 pipeline even before Russia’s invasions. BBC News highlighted that the US has tried to block the pipeline before, by imposing sanctions on companies involved in the project. It adds:

“The US and UK, along with Russia’s neighbours Poland and Ukraine, strongly oppose Nord Stream 2. They fear that if it [sic] were to start operating, it would give Russia even more of a stranglehold over gas supplies to Europe.

“Ukrainian president Volodymyr Zelensky has called Nord Stream 2 ‘a dangerous political weapon’. UK prime minister Boris Johnson said Europe needs to ‘snip the drip feed into our bloodstream from Nord Stream’.”

Olaf Scholz’s freezing of the approval process for the pipeline was praised by Ukraine’s foreign minister Dmytro Kuleba, who called it “a morally, politically and practically correct step in the current circumstances”.

However, the Financial Times said that Russia “is confident it can shrug off Germany’s decision to halt certification of the Nord Stream 2 gas pipeline and believes EU efforts to diversify the bloc’s energy sources will fail”. The article added:

“Moscow is, in effect, betting that the short-term pain from losing Russian gas supplies will break Germany’s resolve to radically change its energy mix, the people close to the Kremlin and Gazprom said.”

Meanwhile, the EU is targeting Russia’s energy sector by implementing an export ban on materials used by Russia for oil refineries, according to BBC News. It added that the UK has also announced a ban on exports of oil refinery equipment to Russia.

Elsewhere, writing in E&E News, journalist Jael Holtzman asked whether sanctions on Russia could impede the US’s clean energy transition.

Holtzman said that Russia is also “leading producer of copper, nickel, platinum group metals and other minerals considered crucial for building a lower-carbon future”, but added that “the White House declined to comment on whether Russian mining companies or executives of those companies would be targeted in future sanctions”.

Meanwhile, BBC News outlined a range of other sanctions that have been imposed on Russia. For example, the US, UK and EU are limiting Russia’s access to “high-tech” imports, to impede its military capabilities. Meanwhile, major Russian banks will see their assets frozen and cut off from the US and UK financial systems.

In the days following Russia’s invasion, major oil firms including BPShell and Equinor announced they would seek to sell their stakes in Russian companies and joint ventures. BP’s decision to sell its 20% stake in Rosneft, the state-owned Russian oil firm, was due to what it called an “act of aggression in Ukraine”, BBC News reported.

Politico reported that US sanctions are mainly focussed on banks and will not target Russia’s energy sector. The Financial Times said that gas prices dropped on Friday due to “relief that western sanctions had not dealt a crippling blow” to Russia’s energy exports.

Many wealthy Russian individuals with close ties to the Kremlin will see further sanctions imposed on them, the Guardian added. For example, CNN Business reported that Britain will freeze the assets of Boris and Igor Rotenber – co-owners of the SGM group, who make oil and gas infrastructure.

Further sanctions to impede the country’s production and export of oil and gas are also under discussion. For example, Ukraine has called for Russia to be immediately excluded from the Society for Worldwide Interbank Financial Telecommunications (Swift).

Swift is a financial messaging service, which allows quick international transactions and is used by 11,000 financial institutions in 200 countries. A ban on Swift would “delay the payments Russia gets for exports of oil and gas”, the Guardian said.

Ukrainian foreign minister urged the EU to impose a full oil and gas embargo on Russia by extending the Swift ban to trade in the commodities, Politico reported.

Banning Russia from using the service is “seen as among the most severe that the US, EU and UK could take”, according to the Financial Times. It noted that, in theory, there are alternatives to Swift, but that, in practice, other methods would not work to send money around the world “quickly, reliably, and cheaply”.

CNN Business said that this sanction was considered in 2014 in response to Russia’s annexation of Crimea. At this time, it was estimated that excluding Russia from Swift would cause its economy to shrink by 5%, it adds.

Separately, the Financial Times said that Western leaders are “split” on whether to remove Russia from Swift. It reported that Boris Johnson is pushing “very hard” for Russia to be removed and that Canadian prime minister Justin Trudeau also backed the move. However, it said:

“But earlier on Thursday German chancellor Olaf Scholz warned that his country had reservations about such a move and so did the EU, according to officials close to sanctions negotiations. A German official declined to comment, saying only that ‘all options are still on the table’.”

What impact is the crisis having on food and other commodities?

One of the biggest global ramifications of Russia’s invasion of Ukraine could be its impacts on a diverse range of globally traded commodities, from agriculture and timber through to mining and metals.

Agriculture

As Carbon Brief highlighted in its newsletter Cropped earlier this month, war could take a severe toll on global food security.

Both Russia and Ukraine serve as two of the world’s major breadbaskets, accounting for nearly a quarter of world’s wheat exports in 2019. Ukraine, whose flag is seen as representing “blue skies over fields of wheat”, is the fourth-largest supplier of wheat and corn in the world. It contributes nearly 12% to the world’s wheat exports and 16% of corn exports, Reuters reported.

As Foreign Policy highlighted, the country’s historic breadbasket is concentrated in Ukraine’s eastern oblasts (regions): Kharkiv, Dnipropetrovsk, Zaporizhia and Kherson that lie just west of Donetsk and Luhansk which have been at the epicentre of occupation by Russian forces.

Ukraine supplies the EU with almost half of its corn and a quarter of its cereals and vegetable oil. But the subject of food security has not yet been discussed by EU agricultural ministers, Politico reported. US agriculture secretary Tom Vilsack stated at the Agricultural Outlook Forum that the invasion would have “at most, a muted effect” on food prices in the US, according to the Food & Environment Reporting Network.

Food prices have already soared to their highest levels since 2011, the New York Times reported, thanks to rising energy and input prices, supply chain disruptions and extreme weather.

Among the regions that could be worst affected by the war in Ukraine are the Middle East and African nations which account for almost 40% of Ukraine’s exports. The Middle East also relies on maize, barley and cooking oil imports from Ukraine.

Egypt, the world’s biggest wheat importer and COP27 host, is particularly at risk, given that it imports almost 70% of its grain from Russia and Ukraine and its “stability depends on these imports”, the Economist reported. The Egyptian government relies on wheat imports to make subsidised bread for citizens.

Last year, Russia imposed taxes on wheat exports, leading Egypt’s wheat buyer to purchase cereals at a price “$80 higher than projected” in the government’s budget for 2020-21, the Middle East Eye reported last year.

Concerns about conflict in Ukraine “have already…sent wheat futures to two-month highs”, said the Washington Post. Ukraine already counts “economically battered, war-torn or otherwise fragile states” among its biggest importers, it added. These include Yemen, Lebanon and Libya, “where grain shortages or cost surges could not only deepen misery, but churn up unpredictable social consequences”. Ukraine’s exports account for 22%, 43% and 21% of Yemen, Libya and Bangladesh’s wheat consumption, respectively.

Meanwhile, Associated Press reported that, on Thursday, China approved imports of wheat from Russia, with assurances that Russia would “take all measures” to prevent contamination by wheat smut fungus.

Beyond cereals and corn, the Black Sea region accounts for 60% of world sunflower oil output. According to Reuters, nearly 380,000 tonnes of sunflower oil shipments from the region to India, worth $570mn, are now stuck at ports and with producers. The world’s biggest edible oil importer could see sunflower oil scarcity “within a few weeks” if loading is not resumed, traders said, and might pivot to soy oils and palm oil imports again, which are “already trading at record highs”.

India is reportedly considering how to establish a rupee payment mechanism for trade with Russia to “soften the blow of Western sanctions”, with Indian officials concerned about the impact on fertiliser supplies from Russia and its impact on India’s farm sector.

Sanctions aimed at Russian fertiliser could also heavily impact Brazil’s agriculture sector and global soy production, Reuters reported. Brazil imports nearly 85% of its fertilisers and counts Russia as its biggest supplier of the “NPK” mixture: nitrogen, phosphorus and potassium. Last year, Brazil hit a record high for fertiliser imports, with Russia accounting for 9mn tonnes of imports.

Sanctions may not apply to transactions related to Russia’s agricultural commodity exports, given that it is one of the “eight general licenses” that are authorised and may continue without objections, “as long as they run through non-US non-sanctioned banks”, noted historian Adam Tooze.

Metals and mining

Russia is a significant producer of many metals and other mined commodities, including coal, iron ore, nickel, palladium, platinum and uranium. Metals markets “have been driven into a frenzy” as tensions have risen, Politico reported. It noted that many of the minerals mined in Russia are “considered crucial for building a lower-carbon future”.

For example, Russia is the world’s largest producer of palladium, producing about 40% of the world’s supply last year. Palladium prices hit a six-month high on Thursday following the Russian invasion. According to Bart Melek, the head of commodity strategy at TD Strategies, the metal is “likely to reach record highs seen last year”, Mining.com reported. The largest use of palladium is in catalytic converters; it is also found in a slew of consumer electronics and is used to store and purify hydrogen.

Russia also produces 10% of the world’s platinum, another important metal used in catalytic converters. Platinum is currently trading 12% higher than it was this time last year, MarketWatch reported. The “steep price rise” is expected to continue as the situation in Ukraine deteriorates, the website added.

Reuters reported two weeks ago that the White House had advised the US semiconductor industry to “diversify its supply chain”. The US sources 90% of its semiconductor-grade neon from Ukraine.

Cobalt is primarily used in lithium-ion batteries. Although a distant second to the Democratic Republic of the Congo, Russia is the world’s next-largest producer of the metal, accounting for just over 4% of the global total.

Meanwhile, the price of nickel currently sits at “an 11-year high”, E&E News reported. The Russian mining company Nornickel produces about 7% of globally mined nickel, according to Reuters, which noted that the company “sells to global industrial consumers under long-term contracts”.

Nornickel is also a major producer of copper. The company was responsible for nearly half of Russia’s total production in 2021 when Russia produced about 3.5% of the world’s total. Copper from Russia is mainly exported to Asia and Europe, Reuters reported.

Nornickel has suggested in the past that its products are so vital to the energy transition and economy that they could be seen as “impossible to sanction”. The company has also “sought to promote itself as a future provider of pivotal metals for the energy transition” to western countries, Politico reported.

Russia also produces 6% of the world’s aluminium. Global aluminium prices rallied to a record high on Thursday, Reuters said, “sparking fears” that sanctions could squeeze supplies both of the metal and energy inputs needed to produce it.

Another key mined commodity that climate analysts will be closely watching is coal. Russia is the world’s sixth-largest producer of coal and its third-largest exporter. China, South Korea, Japan, Vietnam and India are among its biggest Asian markets, Reuters reported, while Turkey, the Netherlands, Germany, Poland count as major coal destinations in the EU. Hours after Russia launched its attack on Ukraine, a coal bulk vessel was struck by a shell in Ukrainian waters in the Black Sea.

In 2021, Russia was the second largest coal exporter to China after Indonesia, with China importing 26.69m tonnes from January to September, according to S&PGlobal Platts. Just last week, China and Russia agreed a new coal deal for a 100m tonne supply, Yahoo News reported. According to S&PGlobal Platts, “market participants globally are cautious about trading Russian coal”, and some Chinese “buyers have been advised by banks and higher authorities” against procuring Russian coal, in the light of sanctions.

Eastern Ukraine is home to the Donets Coal Basin, or Donbas, “one of the largest mining regions”, Forbes reported. Donbas is home not only to coal deposits, but “significant” reserves of methane and “major quantities” of iron ores. Ukraine has the world’s fifth-largest reserves of iron ore, according to the US Geological Survey.

Forbes added that when Russia seized Crimea in 2014, it “resulted in disruption of the region’s steel production and coal mining, gas and rare earths extraction”.

Ukraine and Russia are the world’s 9th and 10th biggest producers of uranium, respectively, with the Donbas region in particular holding a major uranium reserve.

Update 28/02/2022: This article was updated with news of Germany’s plans to accelerate renewables, oil majors pulling out of Russia and with additional analysis and commentary.

 

Teaser photo credit; By U.S. Department of State from United States – Deputy Secretary Sherman Briefs the North Atlantic Council, Public Domain, https://commons.wikimedia.org/w/index.php?curid=114448671