The current tradeoff countries are facing – namely, whether to send money to Russia or to use coal-fired plants – is an “ugly situation,” according to Giese. But by choosing what could be the lesser of two evils, he says countries could be facing another, long-term tradeoff with world-shaping consequences.
“As a country, you may choose to use coal-based energy. Do you then simply accept higher temperatures and shift the problem to future generations, our children and grandchildren? Or do you say ‘no, we have to make up for it and follow through on our net-zero commitments, even if we’re starting later’?”
A recent report published by MSCI’s ESG Research team sought to quantify the potential impact of Russia’s war on the world’s carbon emissions and efforts to reach net-zero emissions by 2050. Based on the analysis, a shift by Europe to replace all its Russian gas imports with coal would, in the extreme worst case, raise emissions by as much as 0.8 gigatons of CO2 equivalent in the first year.
The least costly course of action overall, according to the report, would be to adhere as close as possible to European climate policy from before the war. To accomplish this, the report said Europe would need to mobilize all available options, including accelerating the financing of renewables.
“One of the things that we already hear politicians talking about in Europe is taxing energy companies’ windfall gains,” Giese says. “At the moment, they’re profiting significantly because of how high fossil fuel prices are. We estimate that that will create $200 to $300 billion in extra profits for the energy sector.”