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Klimat: Russia in the Age of Climate Change
A discerning analysis of the future effects of climate change on Russia, the major power most dependent on the fossil fuel economy.
Russia will be one of the countries most affected by climate change. No major power is more economically dependent on the export of hydrocarbons; at the same time, two-thirds of Russia’s territory lies in the arctic north, where melting permafrost is already imposing growing damage. Climate change also brings drought and floods to Russia’s south, threatening the country’s agricultural exports.
Thane Gustafson predicts that, over the next thirty years, climate change will leave a dramatic imprint on Russia. The decline of fossil fuel use is already underway, and restrictions on hydrocarbons will only tighten, cutting fuel prices and slashing Russia’s export revenues. Yet Russia has no substitutes for oil and gas revenues. The country is unprepared for the worldwide transition to renewable energy, as Russian leaders continue to invest the national wealth in oil and gas while dismissing the promise of post-carbon technologies. Nor has the state made efforts to offset the direct damage that climate change will do inside the country. Optimists point to new opportunities―higher temperatures could increase agricultural yields, the melting of arctic ice may open year-round shipping lanes in the far north, and Russia could become a global nuclear-energy supplier. But the eventual post-Putin generation of Russian leaders will nonetheless face enormous handicaps, as their country finds itself weaker than at any time in the preceding century.
Lucid and thought-provoking, Klimat shows how climate change is poised to alter the global order, potentially toppling even great powers from their perches.
Russia will be one of the countries most affected by climate change. No major power is more economically dependent on the export of hydrocarbons; at the same time, two-thirds of Russia’s territory lies in the arctic north, where melting permafrost is already imposing growing damage. Climate change also brings drought and floods to Russia’s south, threatening the country’s agricultural exports.
Thane Gustafson predicts that, over the next thirty years, climate change will leave a dramatic imprint on Russia. The decline of fossil fuel use is already underway, and restrictions on hydrocarbons will only tighten, cutting fuel prices and slashing Russia’s export revenues. Yet Russia has no substitutes for oil and gas revenues. The country is unprepared for the worldwide transition to renewable energy, as Russian leaders continue to invest the national wealth in oil and gas while dismissing the promise of post-carbon technologies. Nor has the state made efforts to offset the direct damage that climate change will do inside the country. Optimists point to new opportunities―higher temperatures could increase agricultural yields, the melting of arctic ice may open year-round shipping lanes in the far north, and Russia could become a global nuclear-energy supplier. But the eventual post-Putin generation of Russian leaders will nonetheless face enormous handicaps, as their country finds itself weaker than at any time in the preceding century.
Lucid and thought-provoking, Klimat shows how climate change is poised to alter the global order, potentially toppling even great powers from their perches.
336 pages, Hardcover
Published October 27, 2021
12 people are currently reading
290 people want to read
About the author
Thane Gustafson
20 books16 followersThane Gustafson is Professor of Government at Georgetown University and Executive Director of IHS Markit. His books include Crisis amid Plenty: The Politics of Soviet Energy under Brezhnev and Gorbachev, Capitalism Russian-Style, and Wheel of Fortune: The Battle for Oil and Power in Russia.
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Displaying 1 - 14 of 14 reviews
February 27, 2022
“Energia” should have been the title because this was really about energy economics and its impact on Russia. Climate change is a catalyst in the background, and not even the main cause for most of the issues brought up in this book. For example, poor reinvestment in oil means that they have not done much exploration for new fields or offshore oil, and have barely begun using newer tech for existing fields. So it is costing them more and more to suck less out of the same old holes they have been exploiting since the Soviet era. Oil is by far their largest export and a huge portion of the state budget. Carry this on in all other extractive industries and you see the failure to make them sustainable in a world with declining demand, the refusal to adapt because of motivated reasoning to believe climate change is a hoax, and they cling to the same old ways when everyone around them are changing. The Saudis on the other hand are investing heavily in an “energy transition” for their economy and investing huge amounts of money in finding other industries, especially where they can invest in and mobilize their educated population. Coupled with Russia’s demographic collapse, I think Putin has known for a long time that Russia’s power is well past its peak and decided to ride it in to the ground rather than invest in a sustainable future where he and his cronies have a looser grip. If Russia’s exports decline by 45% by 2050 with escalating costs, this will put Putin at direct odds with the oligarchs that keep him in power as he has to use an increasingly iron fist to extract rents from them.
December 15, 2021
Thane Gustafson continues his brilliant research on Russian energy. This time he tries to assess the direct and indirect effects that climate change and global energy transition will have on Russia in a perspective of 2030 and 2050. Each chapter studies a particular export industry providing a historical overview, the current state of affairs, opportunities, challenges, and risks that it will face in foreseeable future.
Would recommend Klimat not only to those who are interested in Russia but as a general overview of current trends in global energy and raw material commodities and how the COVID-19 pandemic affects global energy supply and demand. It's a thoroughly written book that is not overloaded with extensive economic data and imbued with genuine respect for Russian history, culture, and science.
Would recommend Klimat not only to those who are interested in Russia but as a general overview of current trends in global energy and raw material commodities and how the COVID-19 pandemic affects global energy supply and demand. It's a thoroughly written book that is not overloaded with extensive economic data and imbued with genuine respect for Russian history, culture, and science.
May 8, 2023
Incisive analysis, though slightly out-of-date because written in early days of pandemic. Seems hastily written - not a literary classic, but worthwhile.
January 30, 2023
This is a very readable book, which is really more of a thought experiment that attempts to answer different questions related to what will be the future role of Russia and more specifically Russian fossil fuel exports in light of global developments related to climate change. Below are some of the notes I took while reading.
The author emphasizes a number of times that domestic pressure is not a driving factor since no public pressure truly exists beyond some environmental concerns (e.g. pollution, waste management). It is external forces that will have the biggest effects, especially the policies and politics of the EU. Due to a switch away from fossils as a response to climate change in Europe, Russian exports will have to adapt. The author concludes that the decline of revenue from fossil exports will be very damaging to the Russian state.
The chapter on oil focuses on the energy trasition. In 2019, income from oil exports accounted for about 44% of all Russian exports (or $188 billion). Together with gas which was another 12%, both made up about 39% of the total Russian federal budget. According to western companies like BP and consultancies oil demand will continue to grow until it leaks in the 2030s or early 2040s, from which point it will begin a slow decline. And although by 2050 the total quantity of oil consumption will rise in comparison with today, it's share will be lower and, perhaps more importantly, production costs will be higher. In Russia oil from existing, legacy fields in Western Siberia, which represent about 60% of total production, are already in decline while new fields such as in Eastern Siberia require more investments and tend to be less productive and Arctic offshore production costs remain extremely high (requiring at least $100 per barrel to be profitable).
With regards to natural gas, the author is of the opinion that although Russia has the world's largest gas reserves, demand will weaken as Europe moves towards greater decarbonization. It is projected that demand for gas will likely peak by 2030 and could fall back to today's levels by 2050, followed by a sharp decline after. Moreover, although around 70% of Russian gas is consumed domestically at artificially low, subsidized prices, export revenues remain of significant importance. While the European market shrinks, Russian gas will face challenges and increased competition for the growing Asian markets, which will mean lower export volumes. in any event, revenues from exports to Asia will not be enough to offset the decline in Europe. Coupled with lower global gas price, it also means that revenues from gas will not come close to replacing those from oil.
The author recognizes that the revival and modernisation of the coal sector, reorienting it from domestic consumption towards exports, has been one of the great success stories of post-Soviet Russia. Nevertheless, renevues from coal occupy only a distant fifth place. And going forward, by 2050 the big loser will be coal. It is predicted that gas will overtake coal in Europe by 2030 (although I am curious of the author's views on the question of security of supply epecially in light of the war in Ukraine). The European market will continue to shrink rapidly, driven by climate policies, while the growing demand in the Asian market, most notably driven by new electricity generation capacity in China and India, is very much a wild card. High transportation costs, competition from domestic and other suppliers (e.g. Australia) will be a major barrier to expanding the share of Russian coal in those growing markets. Not to mention that Chinese imports of Russian coal would have to double from their present levels to make up for the disappearance of the European market. And even in Asia, concerns over most notably air pollution would lead to an eventual decrease in demand for coal.
As for renewables, the interest of the Russian state seems to be only concerned with potentially developing a high tech industry for components destined for export; there seems to be no interest in building capacity at all even in isolated, areas unconnected with the system which currently rely on subsidized diesel generators for power. However, any potential future Russian exports will face a very steep competition, notably from China.
The chapter on nuclear power generation, which is the second largest low-carbon electricity source in the world, was a very interesting read. After going through the history of the sector and focusing on its Renaissance in the mid-2000s, the author takes a closer look at the future role nuclear can play. In particular, the conclusions are that there is little prospect on the domestic market. However, exports could be a very promising strategy. Since the late 2000s, Rosatom has established itself as a global leader in civilian nuclear projects - at first focusing on building new plants in former USSR countries but later expanding to neighbours (e.g. Hungary and Finland) and even developing countries such as Egypt and Turkey. The attractiveness of Rosatom projects comes from the "full package" of services it delivers - from financing and staff training to waste treatment. However, looking to the future, the biggest challenge for the Russian export market in nuclear will be innovation and remaining competitive especially in relation to China, which has been developing its own export capabilities, and the US, which has oriented its efforts towards small modular reactors (SMR), which present a number of advantages over classic large models and are widely seen as the future of nuclear.
The chapter on agriculture was fascinating. Something I didn't know before was that export income from agriculture ranks third in Russia after oil and gas (exceeding $25 billion per year!) At the same time agriculture together with the food industry produces 25-28% of Russian greenhouse gasses. The agriculture renaissance was the result of a number of factors but notably the Western sanctions against Russia after the invasion of Crimea and Putin's countersanctions, banning certian food imports from Europe, which resulted in a boom in domestic production. Although the effects of climate change, specifically a warming of 1° to max 2.5°C could have a positive overall effect on Russia by bringing some of the northern territories into the optimal cultivation band, those soils are generally much poorer and much less suitable for agriculture so the author argues that how the land is managed will be of more importance. In particular, how the system responds to extreme weather events (severe droughts in some areas, floods in others) will be of great importance. Lastly, the author also points out that climate change will have a worldwide effect - certain countries will become more reliant on food imports, raising prices, which is likely to ensure that Russian export revenues stay high even though the export quantities might be lower.
From the chapter titled "A tale of two Arctics" what I found fascinating was the conclusions of a study cited by the author which found that the "majority of the population [of the Arctic, which equal to around 7% of Russia's total population] considers climate and environmental changes locally, does not associate them with global drivers, and is not prepared to act on them. Accordingly, even the best designed climate policies cannot be implemented in Northern Russia, because there is no public demand for them." And this is despite buildings cracking, railroad tracks twisting apart, roads heaving and pipelines rupturing due to the melting of the permafrost on which they are built!
From the metals chapter, the main takeaway for me was the huge importance of the European Union's carbon border adjustment mechanism (CBAM), which was in fact adopted just recently. CBAM's intention is to compensate for imports from countries where no carbon tax / trading scheme exists (i.e. where carbon emissions are not priced). Russia's biggest export market for metals is the EU and therefore this will have a huge impact on Russian metal exports, both in terms of quantity and revenue.
In his concluding remarks, the author suggests that Russian income from exports might decline by as much as 45% by 2050 mainly due to the sharp decrease of oil revenues. This will have a significant impact on the state's ability to balance the budget. Another interesting aspect of the issue is the so called "rents" - payments through channels that bypass the budget. These include the direct social costs covered by roducers themselves (especially in the coal sector), the hidden subsidy provided to gas consumers in the form of low domestic prices, and the costs of padded construction contracts awarded to favored interests. Such rents will also decline as the best reserves are produced and production costs go up, and export revenues decrease.
In conclusion, climate change will require an all-out economic diversification in Russia. However, at the moment this seems highly unlikely.
The author emphasizes a number of times that domestic pressure is not a driving factor since no public pressure truly exists beyond some environmental concerns (e.g. pollution, waste management). It is external forces that will have the biggest effects, especially the policies and politics of the EU. Due to a switch away from fossils as a response to climate change in Europe, Russian exports will have to adapt. The author concludes that the decline of revenue from fossil exports will be very damaging to the Russian state.
The chapter on oil focuses on the energy trasition. In 2019, income from oil exports accounted for about 44% of all Russian exports (or $188 billion). Together with gas which was another 12%, both made up about 39% of the total Russian federal budget. According to western companies like BP and consultancies oil demand will continue to grow until it leaks in the 2030s or early 2040s, from which point it will begin a slow decline. And although by 2050 the total quantity of oil consumption will rise in comparison with today, it's share will be lower and, perhaps more importantly, production costs will be higher. In Russia oil from existing, legacy fields in Western Siberia, which represent about 60% of total production, are already in decline while new fields such as in Eastern Siberia require more investments and tend to be less productive and Arctic offshore production costs remain extremely high (requiring at least $100 per barrel to be profitable).
With regards to natural gas, the author is of the opinion that although Russia has the world's largest gas reserves, demand will weaken as Europe moves towards greater decarbonization. It is projected that demand for gas will likely peak by 2030 and could fall back to today's levels by 2050, followed by a sharp decline after. Moreover, although around 70% of Russian gas is consumed domestically at artificially low, subsidized prices, export revenues remain of significant importance. While the European market shrinks, Russian gas will face challenges and increased competition for the growing Asian markets, which will mean lower export volumes. in any event, revenues from exports to Asia will not be enough to offset the decline in Europe. Coupled with lower global gas price, it also means that revenues from gas will not come close to replacing those from oil.
The author recognizes that the revival and modernisation of the coal sector, reorienting it from domestic consumption towards exports, has been one of the great success stories of post-Soviet Russia. Nevertheless, renevues from coal occupy only a distant fifth place. And going forward, by 2050 the big loser will be coal. It is predicted that gas will overtake coal in Europe by 2030 (although I am curious of the author's views on the question of security of supply epecially in light of the war in Ukraine). The European market will continue to shrink rapidly, driven by climate policies, while the growing demand in the Asian market, most notably driven by new electricity generation capacity in China and India, is very much a wild card. High transportation costs, competition from domestic and other suppliers (e.g. Australia) will be a major barrier to expanding the share of Russian coal in those growing markets. Not to mention that Chinese imports of Russian coal would have to double from their present levels to make up for the disappearance of the European market. And even in Asia, concerns over most notably air pollution would lead to an eventual decrease in demand for coal.
As for renewables, the interest of the Russian state seems to be only concerned with potentially developing a high tech industry for components destined for export; there seems to be no interest in building capacity at all even in isolated, areas unconnected with the system which currently rely on subsidized diesel generators for power. However, any potential future Russian exports will face a very steep competition, notably from China.
The chapter on nuclear power generation, which is the second largest low-carbon electricity source in the world, was a very interesting read. After going through the history of the sector and focusing on its Renaissance in the mid-2000s, the author takes a closer look at the future role nuclear can play. In particular, the conclusions are that there is little prospect on the domestic market. However, exports could be a very promising strategy. Since the late 2000s, Rosatom has established itself as a global leader in civilian nuclear projects - at first focusing on building new plants in former USSR countries but later expanding to neighbours (e.g. Hungary and Finland) and even developing countries such as Egypt and Turkey. The attractiveness of Rosatom projects comes from the "full package" of services it delivers - from financing and staff training to waste treatment. However, looking to the future, the biggest challenge for the Russian export market in nuclear will be innovation and remaining competitive especially in relation to China, which has been developing its own export capabilities, and the US, which has oriented its efforts towards small modular reactors (SMR), which present a number of advantages over classic large models and are widely seen as the future of nuclear.
The chapter on agriculture was fascinating. Something I didn't know before was that export income from agriculture ranks third in Russia after oil and gas (exceeding $25 billion per year!) At the same time agriculture together with the food industry produces 25-28% of Russian greenhouse gasses. The agriculture renaissance was the result of a number of factors but notably the Western sanctions against Russia after the invasion of Crimea and Putin's countersanctions, banning certian food imports from Europe, which resulted in a boom in domestic production. Although the effects of climate change, specifically a warming of 1° to max 2.5°C could have a positive overall effect on Russia by bringing some of the northern territories into the optimal cultivation band, those soils are generally much poorer and much less suitable for agriculture so the author argues that how the land is managed will be of more importance. In particular, how the system responds to extreme weather events (severe droughts in some areas, floods in others) will be of great importance. Lastly, the author also points out that climate change will have a worldwide effect - certain countries will become more reliant on food imports, raising prices, which is likely to ensure that Russian export revenues stay high even though the export quantities might be lower.
From the chapter titled "A tale of two Arctics" what I found fascinating was the conclusions of a study cited by the author which found that the "majority of the population [of the Arctic, which equal to around 7% of Russia's total population] considers climate and environmental changes locally, does not associate them with global drivers, and is not prepared to act on them. Accordingly, even the best designed climate policies cannot be implemented in Northern Russia, because there is no public demand for them." And this is despite buildings cracking, railroad tracks twisting apart, roads heaving and pipelines rupturing due to the melting of the permafrost on which they are built!
From the metals chapter, the main takeaway for me was the huge importance of the European Union's carbon border adjustment mechanism (CBAM), which was in fact adopted just recently. CBAM's intention is to compensate for imports from countries where no carbon tax / trading scheme exists (i.e. where carbon emissions are not priced). Russia's biggest export market for metals is the EU and therefore this will have a huge impact on Russian metal exports, both in terms of quantity and revenue.
In his concluding remarks, the author suggests that Russian income from exports might decline by as much as 45% by 2050 mainly due to the sharp decrease of oil revenues. This will have a significant impact on the state's ability to balance the budget. Another interesting aspect of the issue is the so called "rents" - payments through channels that bypass the budget. These include the direct social costs covered by roducers themselves (especially in the coal sector), the hidden subsidy provided to gas consumers in the form of low domestic prices, and the costs of padded construction contracts awarded to favored interests. Such rents will also decline as the best reserves are produced and production costs go up, and export revenues decrease.
In conclusion, climate change will require an all-out economic diversification in Russia. However, at the moment this seems highly unlikely.
August 28, 2023
First impression - quite boring and academical (never mind too 'academical looking' books!). Second impression - that's a bit dry, but probably informative. And the final one - the amount of knowledge and insights it gives is just insane compared to it's size and well-balanced amount of facts vs narratives given, and it's delivered in relatively neutral and accessible manner. Probably one of the best reads for me on Russia recently.
February 27, 2022
Comprehensive overview of the challenges Russia faces in the near future and long run as a result of climate change, in particular the ones facing its economy. Gustafson is a careful observer and refrains from making too audacious, sweeping claims. With a background in energy economics, he could be argued to lack somewhat in terms of the sociopolitical analysis. The book does point toward a most uncertain future domestically in terms of societal and political unrest, once Russia's fossil fuel-based export revenue would significantly diminish as a consequence of lessening demand abroad.
One wonders whether Putin might have deemed this the opportune moment, therefore, to strike Ukraine while he still can in order to increase Russia's great power standing and gain a hold on Ukraine's agricultural output.
One wonders whether Putin might have deemed this the opportune moment, therefore, to strike Ukraine while he still can in order to increase Russia's great power standing and gain a hold on Ukraine's agricultural output.
June 10, 2022
Spoiler alert. Most striking to me was Russia's similarity to everywhere else: no coordinated planning, politically driven narratives, huge oil and gas subsidies, declining oil and gas fields, reliance on coal-fired electricity from antiquated plants (none built since 1991), lip-service vying with hype on renewables. Two-thirds of the country sits on destabilizing permafrost that will warp and topple huge amounts of infrastructure while burping unimaginable amounts of methane. Forests perched on top will gradually become fire hazards. One difference from U.S.: shale oil is not yet economic and foreign oil companies won't be investing soon with sanctions. Short-term warming may provide a boost for agriculture but not nearly enough to replace hydrocarbons for foreign exchange.
December 19, 2023
Gustafson once again - like with his magisterial “The Bridge” about the origins of Russias gas policy - overviews different aspects of resource extraction and exports - and how pending climatic changes would influence the routes and the flows of these.
A professional review of all major components of the country’s policies w r to energy and agriculture - feels as an extremely long professional paper.
A key outtake - the need for strong capital investment to improve the efficiency of output - lacking due to capital flight before the war - is now effectively solved by the imposed sanctions - allowing the increasingly autocratic region to capitalise on the generated surplus.
A professional review of all major components of the country’s policies w r to energy and agriculture - feels as an extremely long professional paper.
A key outtake - the need for strong capital investment to improve the efficiency of output - lacking due to capital flight before the war - is now effectively solved by the imposed sanctions - allowing the increasingly autocratic region to capitalise on the generated surplus.
August 5, 2022
great overview of climate and energy transition (more about energy transition than climate, but the two are very related!). Needs a second edition after the Ukraine invasion - so much of the conclusions are greatly impacted (changed?), but still the framework and analysis are great. One minor nerd fix (for the second edition?) - permafrost doesn't melt (it could - but we'd really be in big trouble. The temperature that soil melts is quite high!). Permafrost thaw is bad enough.
Good read and I've recommended it to several folks.
Good read and I've recommended it to several folks.
September 29, 2023
A good book, extra points for brevity (it comes in around 225 pages of actual text). Gustafson does a good job explaining the relevant concepts in simple and informative terms. Some of the assumptions he makes probably needed more substantiation, but overall its very helpful. An obvious note that a lot of the more short term predictions have gone out the window with the War in Ukraine, the halt in Russian gas/oil to Europe, destruction of Nordstream II, etc. but that's not his fault.
June 27, 2022
A really enlightening and fascinating read. Gustafson establishes for the reader the current situation, relevant historical considerations, and significant contributors to the future circumstances. All together we receive a knowledgeable and clear picture and are left to consider the broader implications of the thoughts and considerations shared here.
March 24, 2022
Decent but the writing was a bit bland. Had maps, so kudos to that, but read more like a textbook.
August 19, 2022
Written pre full invasion of Ukraine, this book is already outdated. Dry and repetitive.
June 10, 2022
Gustafson wrote an entire book about the Russian energy and metals industries when per his own effective admission, he never talked to anyone who knows anything about it, nor consulted their research or data.
Now in fact Russia is a major producer of fossil fuels and also mines a bunch of materials, which is often energy intensive and otherwise nasty. But if an academic is going to write a book about these sins, it’s incumbent for him to investigate his targets and not rely on prejudices and the likes of Anatoly Chubais.
Now in fact Russia is a major producer of fossil fuels and also mines a bunch of materials, which is often energy intensive and otherwise nasty. But if an academic is going to write a book about these sins, it’s incumbent for him to investigate his targets and not rely on prejudices and the likes of Anatoly Chubais.
Displaying 1 - 14 of 14 reviews