President Vladimir Putin of Russia has just done something extraordinary: taken action that will maximize the world’s transition to clean, renewable energy. Indeed, he may be single-handedly saving us from global warming.
Putin, of course, has no idea of his future standing as a preeminent eco-warrior. No matter. His decision to starve Europe of natural gas this winter has probably sped up the European Union’s shunning of fossil fuels. If that is not enough to forestall planetary disaster, his invasion of Ukraine will finish the job by setting widespread “greening” snowballs in motion.
Economic crises incentivize nations, their citizens, and their domestic companies. From July to December 1940, for example, the United States produced only 3,611 military aircraft. Production in 1944 rose at least sevenfold to nearly one hundred thousand planes. The increase came about in response to Japan attacking Pearl Harbor and Germany declaring war on us. During World War II, Ford Motor Co. produced almost 90,000 aircraft, nearly 9,000 of them at its newly built Willow Run plant, originally designed to build cars, alone.
The dramatic shift to a wartime footing by US manufacturers happened in under 48 months. No one, certainly not the Germans or Japanese, imagined we could pull off this industrial and economic transformation so quickly.
The battle to arrest global warming needs a similar effort. Indeed, it may be a greater challenge than any previous collective effort to face a universal existential threat.
The public mobilization required to fight climate change, though, has failed for decades. We have had no equivalent of Pearl Harbor, D-Day, or the Battle of the Bulge to galvanize public opinion — until now.
Before Russia invaded Ukraine last week, European citizens, especially those in Germany, were willing to accept natural gas supplied by Russia as “sort of green.” Within the last few weeks, the European Union’s environmental ministers even proposed exempting natural gas from any aggressive emissions-reducing measures. Gerhard Schröder, Germany’s former chancellor and chair of Nord Stream’s shareholder’s committee, has vociferously supported Nord Stream 2, the pipeline that would double Russia’s gas exports to the region.
The brutal invasion of Ukraine has changed everything.
Olaf Scholz, Germany’s new chancellor, has put Nord Stream 2 on ice. Robert Habeck, the country’s vice chancellor and minister for economic affairs and climate action, warned Russia that Germany would permanently turn away from Russian oil and gas should those supplies be interrupted.
Meanwhile, EU officials in Brussels are finalizing the details of their “carbon border adjustment mechanism.” The CBAM is the union’s economic nuclear bomb. When enacted, it will slap tariffs on imports of carbon-intensive goods such as steel and cement. In the EU’s own words, “The CBAM will equalize the price of carbon between domestic products and imports and ensure that the EU’s climate objectives are not undermined by production relocating to countries with less ambitious policies.” Putin and his advisers have been pushing back against the CBAM for months because, under its strictures, Russia would be the biggest loser. Indeed, as the CBAM gained momentum last spring, Russia’s stance toward the EU and Ukraine became more strident.
Igor Sechin, CEO of the Russian oil company Rosneft and one of the few people the increasingly isolated Putin appears to trust, recognized the threat. As reported, he “told the Kremlin that carbon border taxes like the European Union’s could inflict far greater damage to Russia’s economy than sanctions.”
Bloomberg’s John Ainger wrote in August 2021 that the Russians would face a CBAM impact of around 600 million euros by 2035, falling mainly on its iron and steel exports. His calculations are dated. The CBAM taxes and other economic steps taken will now be much more dramatic — as will the actions of those working to accelerate the green revolution.
We can expect, for instance, the Europeans to rally in the next years to retrofit old, inefficient homes, buildings, and offices, thus halving their heating requirements. The EU and European countries, following Norway’s example, will probably pass economic incentives and regulations aimed at getting diesel and gasoline-powered cars and trucks off the road.
The actions in Europe should drag other countries along in its wake. Europe is China’s largest trading partner. To preserve its market, China will probably move rapidly to cut fossil fuel use, especially since Russia no longer offers it any economic opportunity. The United States will also be yanked along despite protestations from Republicans and Democratic Senator Joe Manchin of West Virginia. In this country, the effort will probably be championed by 21st-century tech titans Google, Amazon, Microsoft, and Tesla because these companies understand the severity of the climate crisis and have rushed to lead the response by their actions.
Winston Churchill once said, “Never let a good crisis go to waste.” Unwittingly, Vladimir Putin has created a crisis that, despite its horrendous immediate consequences, may ultimately prepare the world to resolve a different kind of universal existential threat.
Philip K. Verleger Jr. is a senior fellow at the Niskanen Center and founder of the economic consulting firm PK Verleger LLC.