Confusions: From Ukraine to Oil Companies

Last week’s blog focused on globalization. Per definition, we are part of the global picture and from this perspective, we have a direct interest in whatever global conflict emerges. Two of our present global conflicts can serve as guides: the Russian invasion of Ukraine and climate change. Almost all of us are directly involved in both, albeit in different ways.

Russia and Ukraine are obviously the most directly involved in the war. Their soldiers are killing and wounding each other, and the Russian army is directly involved in the slaughter of Ukrainian citizens and destruction of the country. Yesterday, Russia celebrated Russian Victory Day, following the signing of the German Instrument of Surrender late in the evening on May 8, 1945 (after midnight). Almost everybody expected an announcement focused on the war in Ukraine. President Putin defended the Russian activity but didn’t offer any guidance. How believable an announcement would have been depends on the perspective of the listeners. Misinformation during wars is common. It’s one of the most important tools that armies use. Recently, the New York Times tried to follow the different information on common events that Russians, the Ukrainians, and the rest of the world follow on the state of this war. Below are two short paragraphs from that piece:

To Western audiences, Russia’s invasion of Ukraine has unfolded as a series of brutal attacks punctuated by strategic blunders. But on Russian television, those same events were spun as positive developments, an interpretation aided by a rapid jumble of opinion and falsehoods.

Much of Russian news media is tightly controlled by the Kremlin, with state-run television working as a mouthpiece for the government. Critical reporting about the war has been criminalized.

The rest of us follow much more competitive sources of information.

Significant parts of the world (many of which I included in the label “the West” in previous blogs) strongly support Ukraine in this conflict. However, most refuse to get directly involved in a war with Russia because they fear uncontrolled escalation and possible existential consequences. Instead, they have decided to support Ukraine through economic sanctions on Russia and military equipment delivery to Ukraine. However, our knowledge of the impacts of these sanctions on Russia depends to a large degree on the information coming from Russia, making it difficult to judge the truth. The Economist believes that Russia is doing well:

In early April we pointed to preliminary evidence that the Russian economy was defying predictions of collapse, even as Western countries introduced unprecedented sanctions. Recent data further support this view. Helped along by capital controls and high interest rates, the ruble is now as valuable as it was before Russia’s invasion of Ukraine in late February (see top chart). Russia appears to be keeping up with payments of its foreign-currency bonds.

Al Jazeera has a different perspective:

The ongoing geo-economic conflict between Russia and the West is a complicated one, surrounded by nearly as much disinformation and misinformation as the war in Ukraine itself. As such, both parties are confidently claiming to have the upper hand. But looking at the evidence at hand objectively, it becomes clear that the Kremlin is in retreat.

As to climate change, all of us are directly involved and our future generations are going to be even more so. It has long been understood by many that one cannot solve the climate change threat without addressing the issue of misinformation that drives deniers (see my “Three Shades of Deniers” blog from September 3, 2012). Science News published an article about this last summer:

Over the last four decades, a highly organized, well-funded campaign powered by the fossil fuel industry has sought to discredit the science that links global climate change to human emissions of carbon dioxide and other greenhouse gases. These disinformation efforts have sown confusion over data, questioned the integrity of climate scientists and denied the scientific consensus on the role of humans.

Such disinformation efforts are outlined in internal documents from fossil fuel giants such as Shell and Exxon. As early as the 1980s, oil companies knew that burning fossil fuels was altering the climate, according to industry documents reviewed at a 2019 U.S. House of Representatives Committee on Oversight and Reform hearing. Yet these companies, aided by some scientists, set out to mislead the public, deny well-established science and forestall efforts to regulate emissions.

A recent PBS short series emphasizes the connection focusing on the role that oil companies—specifically the American Petroleum Institute, Exxon-Mobile, and the Koch brothers—have played in emphasizing uncertainty (“scientists don’t agree”) so as to negate any attempts at policy changes.

Recently, some oil companies have claimed a change of heart and made promises of net-zero emissions but it’s always good to look at the details:

What Does Net Zero Emissions Mean for Big Oil? Not What You’d Think

BP, Shell, and other companies say they’ll address climate change. But their pledges fall far short of what’s needed to meet global climate goals. By Nicholas Kusnetz

Bernard Looney, BP’s new chief executive, stood behind the podium in a London hotel in February and announced that the company would dramatically shift the way it did business.

Framed by a multi-hued green background, Looney described a transformation of BP’s structure and operations that would steer the oil giant to spend more on clean energy and less on fossil fuels. By 2050, he said, BP would achieve net-zero greenhouse gas emissions, joining a growing list of governments and corporations committed to tackling climate change.

Looney’s speech launched a rapid-fire game of one-upmanship among Europe’s largest oil and gas companies. Within three months, Total and Royal Dutch Shell had announced their own plans to reach net-zero emissions by 2050, building on previous pledges to increase spending on low-carbon energy sources like wind, solar and biofuels.

Two of their American counterparts, ExxonMobil and Chevron, have also announced goals to reduce climate-warming pollution, although much more modest ones.

But many of the pledges are misleading, and misrepresent how much the oil giants are changing. Most glaring is that none of the companies has committed to cut its oil and gas output over the next decade, the simplest and most reliable way—one might say the only way—to cut emissions, and a must if the world is to avoid dangerous warming. In fact, the stated net-zero “ambitions,” as the companies generally call them, do not require that greenhouse gas emissions fall to zero at all. They rely instead either partly or largely on capturing or canceling out these emissions with unproven technologies and reforestation at a questionable scale.

Meanwhile, through industry associations the companies have continued to lobby against policies that would hasten a shift away from oil and gas: All the companies, for example, retain membership in the American Petroleum Institute (API), which has lobbied against incentives for electric vehicles, supported the Trump administration’s rollback of methane regulations and backed expanded drilling in the Arctic.

In other words, “net-zero” does not actually mean cutting down on fossil fuel emissions. It’s based on finding emission sinks to balance the damage.

We can tell from their stock prices that—overall, oil companies aren’t doing well with their present policies. Figure 1 shows the performance of a few large oil companies over the last 5 years, compared to the performance of the S&P 500. Maybe these numbers will prompt change in the form of an energy transition, even if just for a better bottom line.

Figure 1Stock performance over major oil companies compared to S&P 500

Last year, before the Russian-Ukrainian war changed power balances in oil, the Institute for Energy Economics and Financial Analysis (IEEFA.Org) warned about the continuing business as usual for oil companies:

Rising prices may give new life to outdated strategies. Each oil uptick has prompted ExxonMobil and like-minded companies to double down on the failed strategy of heavy capital spending on new oil and gas supplies. But until prices rise dramatically and persistently, the oil industry can’t find a sustainable business model in simply depleting and replacing reserves. In 2018, global oil prices stood at $71 per barrel, almost $30 more than in 2020, yet the energy sector still finished in last place in the S&P 500.

Rising prices could lull investors into complacency. The oil and gas industry’s financial woes have galvanized investors into pressing for changes in oil industry governance and strategy. Some companies have responded by diversifying their business models—shifts that were healthy for the companies and rewarded by shareholders. But rising prices could derail this investor pressure, discouraging healthy scrutiny, weakening transparency, and dissipating the momentum of the energy transition.

Unsurprisingly, the Russian invasion of Ukraine and the coming decisions by the European Union to accelerate their “independence” from Russian oil have caused a sharp increase in the international oil price. This has resulted in some improvements in the performance (increase in profits) of the oil companies, as shown in Figure 2.

Figure 2 – Recent ExxonMobil stock price

Next week, I will discuss where I see the oil companies’ net-zero commitments going.

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Globalization

Artist: Enrico Bertuccioli

I have summarized the overlapping global challenges that the world is now facing in multiple previous blogs. The burning issue that all of us must address is how to confront them. The cartoon above emphasizes that the conflict between globalization and localism is not a “fair fight.” Globalization is portrayed as bigger and meaner. However, as in many other organizational structures such as family, workplace, city, country, etc., there are many forms of globalization. We have the ability to join forces to achieve some common objective or we can split up and fight against each other to gain individual advantages. What is missing in the caricature above is that the local fighter is actually a part of the global fighter. So, in a sense, the big fighter is fighting himself. In a sense, the situation resembles my repeated characterization of global impacts of climate, if left unabetted toward the end of the century (search the site for the term, “self-inflicted genocide”). Any civil war can be characterized this way. The Russian invasion of Ukraine, and the genocidal remnants that they leave behind, are short-term (how short, none of us knows) tests of many aspects of globalization. As in any war, there are winners and losers on both sides.

Not surprisingly, the characterization of globalization strongly depends on your local perspectives. Andriy Yermak, the Head of the Office of the President of Ukraine, summarizes the present nature of globalization from a Ukrainian perspective:

The current international security system has nearly expired. It’s rotted through. Its remains have collapsed and buried the world order beneath. Trying to revive it is futile.

Clockwork toys, robots’ mechanical ancestors, became fashionable with the European royal courts during the Thirty Years’ War in the 17th century. But the first world conflict in European history, a series of interconnected wars, resulted in something even more important: creation of the first world order ever.

Since then, the system of international relations has been based on the Peace of Westphalia 1648 and its core principles: national sovereignty, foreign and domestic policies separation, compromise as a means of reconciling conflicting national interests, equality of sovereign states, and negotiating relations between them.

All the subsequent systems were in fact more or less successful attempts to amend this order to ensure the balance of interests of leading states (known as the Great Powers).

This tendency was clearly traced from the Congress of Vienna in 1815 to the Potsdam Conference in 1945. Between the dates, attempts to reject any of the principles of the Peace of Westphalia would inevitably lead to new conflicts. The Great Powers’ aspirations to impose their own will on the rest of the world by force brought the nightmare of two world wars. Or, as some historians rightly point out, the Second Thirty Years’ War of 1914-1945.

Now history repeats itself. Russia’s war on Ukraine is a rejection of all Westphalian principles. We are denied the right to sovereignty. We are under pressure to change our domestic policy. Under the guise of compromise, we are offered surrender. We are denied subjectivity and therefore equality. Our civilians are being tortured and killed en masse for simply being Ukrainian citizens.

Another article offers a different perspective, much more focused on the war’s economic impact on the EU:

WASHINGTON, April 21 (Reuters) – The war in Ukraine has shown the limitations of the decades-long German approach of seeking to change Russia through trade and spells the end of globalisation as we know it, the European Economic Commissioner Paolo Gentiloni said on Thursday.

“This crisis will also spell the end of globalisation as we have known it and reshape global alliances,” Gentiloni said.

“The war and its consequences – including the successive rounds of sanctions that the EU and the US have imposed on Russia – are exacerbating pressures on already strained global supply chains,” he said.

Gentiloni said the invasion also forced the 27-nation European Union to sharply boost spending on defense, on top of the already large, planned investment on fighting climate change and adapting the economy to the digital age.

An IMF (Internationally Monetary Fund) blog features a more “objective” global perspective:

Beyond the suffering and humanitarian crisis from Russia’s invasion of Ukraine, the entire global economy will feel the effects of slower growth and faster inflation.

Impacts will flow through three main channels. One, higher prices for commodities like food and energy will push up inflation further, in turn eroding the value of incomes and weighing on demand. Two, neighboring economies in particular will grapple with disrupted trade, supply chains, and remittances as well as an historic surge in refugee flows. And three, reduced business confidence and higher investor uncertainty will weigh on asset prices, tightening financial conditions and potentially spurring capital outflows from emerging markets.

Russia and Ukraine are major commodities producers, and disruptions have caused global prices to soar, especially for oil and natural gas. Food costs have jumped, with wheat, for which Ukraine and Russia make up 30 percent of global exports, reaching a record.

The use of economic sanctions/incentives as a tool for mitigating climate change emerged even before the Russian invasion. This article is from last summer:

The U.S. government has used sanctions to fight corruption and human rights abuses around the world. Sanctions can also help to deter climate-destroying behavior.

In 2017,  the U.S. government hit billionaire mining magnate Dan Gertler with economic and travel sanctions that sharply curtailed his ability to do business in the United States. The Treasury Department alleged Gertler had engaged in wide-ranging corrupt practices in pursuing mega deals to exploit natural resources in the Democratic Republic of Congo. Sanctions of the type put on Gertler are a key tool in the U.S. government’s diplomatic arsenal and can generate real pain for those sanctioned.

The drivers of climate change link closely to illegal resource extraction, corruption, and human rights abuses. Illegal deforestation in the Amazon, for example, has not only harmed the climate but has also led to widespread violations of Indigenous rights.

Two Democratic lawmakers are proposing that the U.S. government use sanctions to help stop some of the most egregious forms of climate destruction. Senator Ed Markey (D-Mass.) and Representative Veronica Escobar (D-Texas) have introduced the Targeting Environmental and Climate Recklessness Act (TECRA), which would empower the U.S. government to use its powerful sanctions tools in response to apply economic and travel sanctions to individuals engaging in climate-destroying activities. It’s an approach that reflects the aggressiveness and innovation that are desperately needed to take on the global climate crisis.

All of this brings to focus the stresses between global and local interests that were of constant concern during President Trump’s tenure. His famous slogan, MAGA (Make American Great Again) (See previous blogs such as June 27, 2017 and Dec 21, 2021), was a cry for local isolationism. A somewhat more objective look at the advantages and disadvantages of relying on globalization in trying to govern locally can be found below. These are the headers of the arguments; the full article includes more detailed descriptions:

Arguments against:

  • Gains of Globalisation for Rich at the Cost of Poor
  • Source of Repeated Economic Crises
  • Globalisation as an Imposed Decision of the Rich
  • Unequal Distribution of Benefits
  • Strengthened Role of MNCs (multinational corporations)
  • Private Profits at the Cost of Social Security
  • Increased Protectionism and Neo-colonialism
  • Unduly Increased Role of Big Business
  • Working Against Democratic Right of the Ordinary Citizens
  • Globalisation so far has been a Productivity Failure, a Social Disaster, and a Threat to Stability

Arguments For:

  • The Problems Being Faced Today Are Due to Infant Stage of Globalisation:
  • Inevitability of Globalisation
  • Globalisation Essential Under WTO (World Trade Organization)
  • Defects of Globalisation Products of Selfishness of Some States
  • Globalisation is Governable and Dependable

Such “score keeping” of globalization is focused on “me” (the individual country): i.e., what advantages or disadvantages will globalization give “me”? The global response to the Russian invasion of Ukraine is a good example of how the world will handle the global energy crises on which much of the conflict is anchored. One element that is continuously lacking in any attempts to institute global policy standards is the absence of effective global enforcement. I will try to deal with this issue in future blogs.

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US: Cruel Laws Must Still be Enforced??

Two weeks ago (April 12th), I wrote about how busy we all are this April, both with personal and global events: “COVID-19 is still with us and continues to have an impact on most of us. The Russian invasion of Ukraine has also had major impacts, and its end cannot yet be seen. Additionally, the IPCC issued the third part of its 6th report (AR6). Its last report (AR5) was issued in 2013-2014.”

Last week (April 19th), in my blog, “Fighting Russian Aggression & Learning How to Fight Global Wars in the Nuclear Age,” I made an attempt to learn how to use the lesson from the hopefully short-term crisis of Russia’s invasion of Ukraine to fight the much longer-term crisis of climate change. This week, I had hoped to continue this line of thinking by expanding upon the advantages and disadvantages of globalization. In addition, the Public Broadcasting Service (PBS) has started a short series within its “Frontline” program, focused on oil companies and their role in attempts to mitigate climate change. The first episode in this series was titled “The Power of Big Oil (Part One: Denial).” This is a topic that I have covered extensively in the ten years that this blog has been up, and I was happy to try to figure out where the oil companies stand right now on this issue.

However, in a routine, Google scan of current, relevant, media activities, I encountered a piece in Vox that required my immediate attention:

The Supreme Court rules that cruel laws must still be enforced: The Court’s decision is a tremendous, if not unexpected, blow to poor Puerto Ricans.

 By Ian Millhiser  Apr 21, 2022, 3:00pm EDT

United States v. Vaello Madero, which the Supreme Court decided on Thursday, is a heartbreaking case. It asks whether many of the poorest and most vulnerable Americans can be cut off by their own government simply because they live in the wrong part of the United States.

But Vaello Madero is also a case about democracy, and whether democratic governments can enact policies that are needlessly cruel. In an 8-1 decision joined by every justice but Justice Sonia Sotomayor, the Court effectively answered that question in the affirmative.

The content of the issue that this article addresses is specific and complex and should be of great concern to Puerto Rico and other US territories. However, it was not the subject matter that made me feel the need to immediately address the article; it was the title. I will try to explain.

Among my activities this month will be a talk to a Brooklyn high school about my Holocaust experiences. I have given many such talks over the last 15 years, especially during this time of the year. During such talks, I am often asked what I think about the arguments that many of the Germans who murdered Jews during this period were just obeying orders—and that the commanders who issued those orders were only following the state laws of the time. The laws in question were called the Nuremberg Race Laws, and have since been denounced. Ultimately, the Germans who gave the orders were prosecuted in the Nuremberg trials.  Case closed? Not exactly. The issue of military obedience still occupies the attention of many. An example of the current thinking is given below:

To understand why this is the case, it is important to recognize that the law of obedience sits at the intersection of two fundamental interests – the need for good order and discipline in the military, which requires service members to obey superior orders; and the supremacy of the law, which requires service members to be responsible for their illegal acts.  Because these interests can conflict – a superior can issue an unlawful order – the law must mediate between them.

To that end, it is clear that neither extreme can work. On the one hand, the Nuremberg Tribunals and a large body of military jurisprudence rejects the notion that members of the military should be insulated from liability for following orders.  On the other hand, there is broad recognition that holding subordinates liable for all infractions, whether they were conducted pursuant to superior orders or not, would threaten good order and discipline by encouraging legal debate at every stage of the chain of command.

The issue gains special urgency within the context of the Russian invasion of Ukraine and the remnants that the Russian army is leaving in places that are under their control, such as Bucha and Mariupol.

Figure 1 shows an example of a mass grave that was left in Bucha. In my Holocaust talks, depending on the age of the audience, I show the mass graves that the British army found after they liberated Bergen-Belson, the camp where I spent two years of my childhood. The only difference that I can see is that the corpses in Bergen-Belsen were not buried with plastic bags.

Mass grave in Bucha

Figure 1 Mass grave in Bucha (Source: Andriy Levkivsky via BBC)

By some accounts, Russia is now planning to expand its invasion even beyond Ukraine.

I hope that in coming blogs I will be able to return to more relevant abstract topics.

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Fighting Russian Aggression & Learning How to Fight Global Wars in the Nuclear Age

graphic of globe made up of flags shattering

Figure 1 – Source: Interest.co.nz

The world is busy right now with several simultaneous global transitions that will leave an impact long after they are over. I have mentioned these transitions in earlier blogs. They include climate change, demographic saturation, COVID-19, and the Russian invasion of Ukraine. The first two are “long term,” meaning they will peak around the end of the century, while the last two are considered “short term,” meaning they are either past their peak (COVID) or approaching their peak (Russia-Ukraine). They all involve all aspects of global life and are interconnected.

Biden and NATO want to avoid any direct confrontation with the Russians to eliminate escalation to a nuclear conflict (The Fog of Peace and the Online Revolution). After all, WWI started with a “small” incident – assassination of the Austrian archduke by a Serbian nationalist.  The threat of direct nuclear confrontation is not symmetrical; “the West” is trying to avoid it by replacing direct military confrontations with massive, broad economic sanctions. Meanwhile, some Russian voices are loudly making nuclear threats at any opportunity that they have.

Because of the interdependence of these global crises, it will be useful to hear voices from far ends of the world that are not directly involved in most of these crises. This piece by David Skilling from New Zealand, from which the opening picture was taken, can serve as a good example. I’m citing a few paragraphs below:

Russia’s invasion & the aggressive economic sanctions in a deeply globalized world will lead to massive global economic disruption & structural change

This is the first meaningful conflict being (partly) fought using economic instruments in a deeply integrated global economy: it is perhaps the ‘first world economic war’, with effects stretching from New Zealand and Singapore to the Middle East and Europe.  We are in uncharted waters.

Whereas the physical conflict in Ukraine will eventually end, this economic war will be very long-lived – it has its own political logic.  The formal sanctions will be in place for a long time – at a minimum, until the Russian invasion is reversed, and perhaps Mr Putin is gone.  But even if/when sanctions are lifted, the drive for economic independence from Russia (notably in energy) will continue.  And many companies will be reluctant to return rapidly to the Russian market due to stakeholder pressure.

More broadly, precedent has been set for the use of sweeping economic sanctions.  The US, Europe, and others will increasingly use trade, investment, and technology instruments, in strategic competition with their rivals.

The question that I would like to raise in this blog is this: Is it feasible to expand tactics from the “first world economic war” to fight the other global threats that we are facing? This is a complicated question that I will be likely to revisit in future blogs. In this blog, I would like to focus on the difficulties associated with the data in which these global crises overlap.

Figure 2 shows some of the recent economic indicators over the last few years. The COVID-19 pandemic started toward the end of 2019. Shortly after its start, we saw a sharp decline in energy prices because of the sharp decline in demand. As we approached the end of 2021, most people (in developed nations) got vaccinated. The pandemic is still around with different variants; however, most people and countries have learned how to live with it and a relatively quick return to “normal” life started to take place. Overall demand for everyday supplies started to outpace supply and issues with supply triggered relatively sharp, global increases in inflation. The Russian invasion of Ukraine took place at the end of February 2022. However, the Russian army’s encirclement of Ukraine started a few months earlier. The outcry against the move rather quickly triggered major economic sanctions. As I have mentioned, Russia is a petrostate that contributes to the global supply of fossil fuels. European countries are especially vulnerable to disruptions in this supply and the energy prices are determined globally. Energy drives much of our economic activity. One can see sharp inflationary spikes as we start 2022 but these started before the invasion.

Graphs showing changing prices for commodities

Figure 2Global impact of selected indicators

As I have mentioned, it is too early to separate the COVID-19-based impact on prices that have to do with supply chain issues from those related to the economic sanctions that were imposed on Russia. Similar issues can be traced to the anthropogenic impacts on climate change that I discussed in an earlier blog (January 9, 2018 – “Natural” or “Anthropogenic”? Climate Change). The original figure and references from that blog are shown in Figure 3.

Graph of carbon emissions and carbon-14 atmospheric tracing in Mauna Loa, Antarctica, tree rings

Figure 3Carbon emissions and 14C atmospheric tracing

As I explained then, the atmospheric decline in carbon-14 is probably the strongest indicator of the anthropogenic origin of climate change that comes from the burning of fossil fuels. However, early atmospheric tests of nuclear weapons completely masked such impacts. Some data before the beginning of nuclear testing and more data after the 1960s strongly confirmed the decline of 14C related to the anthropogenic burning of fossil fuels as shown in Figure 4. More time is needed to isolate the impacts of the sanctions on the supply chain.

Figure 4More recent measurements of 14C

More time is also needed to judge the effectiveness of the sanctions on Russian behavior in Ukraine. Hopefully, we will be able to figure out if such sanctions can expand to be a global governing tool to minimize global harm such as anthropogenic climate change. More on that in the next blogs.

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April 2022

Monument of the liberation of Farsleben, GermanyMonument for our April 13, 1945 liberation in Farsleben, Germany

The “official” start of spring this year was on March 20th. However, this month started with April Fool’s Day and it seems that if the world’s events were divided among the months in the Gregorian calendar, the fool has gotten more than its share over the 10 years (!) that I have been writing this blog (see previous blogs: April 8April 22, 2014; April 21, 2015; April 26, 2016; March 17, 2020; March 31, 2020).

These include personal events that I have covered in one way or another in previous blogs, including Passover, the beginning of the end of the spring semester, my wife’s birthday, and my liberation from the Nazi camp on April 13, 1945. They also include global events such as Earth Day. However, this year the April fool was very busy. COVID-19 is still with us and continues to have an impact on most of us. The Russian invasion of Ukraine has also had major impacts, and its end cannot yet be seen. Additionally, the IPCC issued the third part of its 6th report (AR6). Its last report (AR5) was issued in 2013-2014.

Most of us have private lives that are interwoven with the global reality and none of us can stay untouched. The opening picture shows the monument to my liberation from Bergen-Belsen by the American army, as I described in earlier blogs. The March 24, 2020 blog described the last stages of erecting this monument. It was scheduled to be unveiled on April 13 that year but the pandemic prevented the official unveiling, so it went up without much fanfare. Everybody was hoping that the ceremony could take place this April but the pandemic didn’t cooperate, so it has now been postponed until the end of August in a modified form. I hope to be able to travel to Europe this summer but we are constantly assessing mitigation strategies so we can minimize risk. As I mentioned in that March 24, 2020 blog, three sides of the monument are engraved with “Liberation – April 13, 1945” in German, Hebrew, and English, while the fourth side shows the emblem of the American army’s 30th Infantry Division, which saved us in Farsleben on April 13, 1945. In the meantime, I am busy finishing the semester, trying to enable my students to follow the IPCC report, giving a talk to a high school about my Holocaust experiences, and giving a talk to a different audience attempting to connect the two.

Being a Holocaust survivor ages me. I cannot hide my age. Advanced age has consequences that apply to me like to everybody else, and one of my priorities this month is to take care of various health issues. These are serious and time-consuming issues (fortunately, I have good health insurance so the financial burden is not too serious), but they are manageable—up to now, I haven’t missed any classes or blog posts.

Right now, the most pressing global issue is to try to stop the Russian aggression in Ukraine. The West (a term I am using for nearly every country that openly opposes the Russian invasion) doesn’t want to get into a direct conflict with Russia for fear of escalation to a nuclear confrontation. So, the West is substituting an economic confrontation for a direct military one. Here is how Janet Yellen summarizes the major economic repercussions of the Ukraine invasion:

Treasury Secretary Janet L. Yellen plans on Wednesday to warn of major consequences for the global economy as a result of Russia’s invasion of Ukraine, with both the conflict and global sanctions imposed in response to Russia’s aggression disrupting the flow of food and energy around the world.

The comments by Ms. Yellen, who will appear before a House committee on Wednesday, come as the United States and the European Union are poised to announce another round of sanctions on Russian financial institutions, government officials and state-owned enterprises as the war in Ukraine shows no sign of abating.

Wars usually victimize both aggressors and defenders. Economic wars are no different. Since, as I have mentioned in earlier blogs, Europe is much more vulnerable to fluctuations in Russia’s energy export than other countries, it suffers the most from the economic sanctions. A good example of this vulnerability is Germany:

Last year, Russia supplied more than half of the natural gas and about a third of all the oil that Germany burned to heat homes, power factories and fuel cars, buses and trucks. Roughly half of Germany’s coal imports, which are essential to its steel manufacturing, came from Russia.

Today, those entanglements loom large as European leaders debate whether energy should be included in more sanctions on Russia amid growing evidence of atrocities committed by Russian troops against Ukrainian civilians. Officials in Germany, Europe’s largest economy, are caught between outrage at Russia’s aggression and their continuing need for the country’s essential commodities.

“It was a mistake that Germany became so heavily dependent on energy imports from Russia,” Christian Lindner, Germany’s finance minister, said Tuesday, heading into talks with his European Union colleagues in Luxembourg.

A few days after that last article was written, the Russian atrocities around Kyiv were revealed, and—in spite of its vulnerability—Europe decided to escalate the energy sanctions by banning coal imports:

European leaders, seeking to punish Russia for reports of atrocities carried out in Ukraine, on Thursday approved a ban on Russian coal, the imported energy source that would be the easiest to replace.

And there were concerns that cutting off coal supplies could cause more harm to the European Union than to Russia. Though the European Union depends on Russian coal, the bloc could replace it more easily with imports from other countries than it could replace natural gas and oil. But banning coal from Russia could send energy prices soaring for European consumers, given the existing shortages in the bloc, according to Rystad Energy, a consulting firm. Carlos Torres Diaz, a senior vice president at Rystad, called the potential sanctions “a double-edged sword.”

All of this has had major impacts on the global energy transition and on all of us. Obviously, none of this was anticipated in the just-released AR6 IPCC reports. The publication of the four components of the report is detailed below:

  • AR6 – WGI – Physical Science – 3949 pages – August 21, 2021
  • AR6 – WGII – Impact, Adaptation and Vulnerability – 3675 pages – February 27, 2022
  • AR6 – WGIII – Mitigation 2913 pages – April 4, 2022
  • AR6 – Synthesis – September 22, 2022

WGI was published at the end of summer 2021, just before the start of the fall semester. WGII and WGIII were published during the last few weeks and the synthesis report will be published at the start of the next semester. The previous report, AR5, was published almost 10 years ago, shortly after I started this blog (see October 15, 2013). The published parts of the AR6 report contain more than 10,000 pages. Each part of the report starts with a “Summary for Policy Makers” (About 40 pages each). The reports are considered by many to be the last word on climate change but the question is: who is their intended audience? The news media has no problem with this. They cherry-pick (September 17, 2019) to suit whatever mood they want to capture by quoting the parts of the report that might help with the message that they want to convey. You can find a few examples of this below.

The first example comes from the IPCC itself, whose objective is to amplify its point. The last example comes from the World Nuclear Association, which is mobilizing the IPCC to try to shift the energy transition in its direction.

The other examples come from press samples:

IPCC climate report 2022 summary: The key findings

Climate change: IPCC scientists report five ways to save the planet

Climate change: Scientists race to finish key IPCC report

The latest IPCC report argues that stabilising the climate will require fast action

Response from World Nuclear Association to the release of the IPCC Working Group III report, Climate Change 2022: Mitigation of climate change

Even the relatively short parts of the “Summaries for Policy Makers” are loaded with references to the other parts of the AR6 report and to AR5. Chances are that most current policymakers were not yet in positions of power when AR5 was published, however, so the references are not necessarily very useful. No matter who you are, if you decide to read the full report, chances are that by the time you finish, it will be irrelevant.

The main question that I have right now is how to teach such a reality. As usual with fast-changing realities, we experiment. In future blogs, I will report the results.

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Single-Use Plastic and Decarbonization

Source: Advanced Waste Solutions

As I mentioned in last week’s blog, I will temporarily leave the topic of the devastating Russian aggression against Ukraine and shift back to the impending global environmental threats connected to climate change. The Russian-Ukrainian conflict is not ending anytime soon. The destruction of cities and random killings have had the devastating consequence of making more than 10% of the population refugees: 4 million—mainly women, children, and the elderly— have had to leave their country for refuge in neighboring states. However, as I have mentioned in earlier blogs, the state of any possible settlement or end of the conflict and the state of the fighting are still in a fog. The important impacts of this conflict on the global energy transition are still too recent to monitor with numbers that will help us measure the long-term impacts. I will return to these issues as soon as that changes.

The title of this blog, with the supporting opening figure, was designed to attract the attention of my students and the administrators of my university—to help address long-term environmental threats that are already mandated by political authorities that govern us and which implementations of their decisions are left to us. The emphasis in this blog will be on mitigating our use of single-use plastics (SUP) and decarbonizing our energy use.

Efforts to minimize the use of SUP are now starting to advance from the general to the global scale:

Against the backdrop of geopolitical turmoil, the UN Environment Assembly (UNEA-5) shows multilateral cooperation at its best,” said President of the Assembly, and Norway’s Minister for Climate and the Environment, Espen Barth Eide. “Plastic pollution has grown into an epidemic. With today’s resolution we are officially on track for a cure.”

The resolution, based on three initial draft resolutions from various nations, establishes an Intergovernmental Negotiating Committee (INC) which will begin its work this year, aiming to complete a draft legally binding agreement by the end of 2024.

That in turn, is expected to present a legally binding instrument, which would reflect diverse alternatives to address the full lifecycle of plastics, the design of reusable and recyclable products and materials, and the need for enhanced international collaboration to facilitate access to technology, to allow the revolutionary plan to be realized.

The list of sovereign countries and states that have already instituted, in various forms, a ban on the use of SUP includes Canada, Kenya, Zimbabwe, the UK, the US (NY, California, and Hawaii individually but no federal ban), the EU, China (to be announced this year), and India.

Down to my own state, the specific legislation that recently was signed by the NY state governor to encourage the two largest public universities—SUNY and CUNY—is given below:

AN ACT to amend the education law, in relation to encouraging the elimination of the use of certain single use plastic items at state university of New York and city university of New York campuses The People of the State of New York, represented in Senate and Assembly, do enact as follows:

  1. Section 1. Section 355 of the education law is amended by adding a new
  2. subdivision 21 to read as follows:
  3. The state university trustees shall adopt a policy requiring that
  4. each institution of the state university of New York collaborate with
  5. students, faculty and staff to encourage campuses to eliminate the use
  6. of certain plastic items generally recognized by the public as being
  7. designed for single use. Such plastic items may include, but shall not
  8. be limited to, tableware, straws, stirrers, cups and food service
  9. In establishing such a policy, the trustees shall consider
  10. the following:
  11. the availability of affordable alternatives;
  12. the accessibility of alternatives to all students, faculty, and
  13. staff;
  14. an evaluation of the effectiveness of reusable alternatives; and
  15. benchmarks for assessing progress.
  16. 2. Section 6206 of the education law is amended by adding a new
  17. subdivision 21 to read as follows:
  18. The board of trustees shall adopt a policy requiring that each
  19. institution of the city university of New York collaborate with
  20. students, faculty and staff to encourage campuses to eliminate the use
  21. of certain plastic items generally recognized by the public as being
  22. designed for single use. Such plastic items may include, but shall not
  23. be limited to, tableware, straws, stirrers, cups and food service containers.
  24. In establishing such a policy, the trustees shall consider
  25. the following:
  26. the availability of affordable alternatives;
  27. the accessibility of alternatives to all students, faculty, and
  28. staff;
  29. an evaluation of the effectiveness of reusable alternatives; and
  30. benchmarks for assessing progress.
  31. 3. This act shall take effect on the ninetieth day after it shall
  32. have become a law.

Other colleges and universities in the US are following a similar path.

The CUNY Board of Trustees requires that campus councils draft a plan to eliminate single-use plastics on campus by April 15th of this year. I am involved in the efforts to follow this mandate.

The multi-level global effort to mitigate the excessive use of SUP has some similarities to the longer effort to mitigate the excessive use of fossil fuels to power our economies.

On a campus level, similar to global carbonization of the atmosphere, SUP can be sorted into four groups that I described in an earlier blog (June 18, 2019):

Scope 1 – direct use on campus.

Scope 2 – indirect use through suppliers or services such as the cafeteria.

Scope 3 – all other indirect use (use by campus personnel away from the campus).

Scope 4 – incorporate minimizing local use in the college curriculum through using college efforts as a lab (see the same June 18, 2019 blog for similar use for decarbonization).

For both decarbonizing energy use and minimizing the use of SUP that results from Scope 2 activities, one needs dedicated administrators that will go through all our delivery contacts to find out if there are alternatives that are committed to delivering their services with zero SEP and using zero-carbon energy.

To address Scopes 1 and 3, we need strong cooperation from students—something that organizations such as NYPIRG can help with. To address Scope 4, we need faculty cooperation to change the curriculum.

Both CUNY and SUNY are multi-campus organizations in which some of the functions are led by the central authority of the university and some are administered by the local campus. The complexities that arise from such a setting will be discussed in a separate blog.

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Fogs and Clear Skies

Ukrainian President Volodymyr Zelenskyy (Source: BBC)

Previous blogs emphasized the fog of the Ukrainian-Russian war (March 8th) and the fog of the peace attempts (March 22nd) but even the combination doesn’t cover the reality of the Russian aggression. Many more aspects of this conflict are covered with fog, even as some important aspects remain clear. One of the clearest aspects of this conflict is the extent to which this aggression is viewed as a global event. A quarter of the Ukrainian population (of 44 million) have been forced to leave their homes, out of which 3.6 million have been forced to leave the country.

The number of dead and injured, whether civilian or military, is still under fog. The economic impacts—both to Russia and the rest of the world—have become more transparent. The complete destruction of the Ukrainian economy doesn’t need numbers to be transparent.

There is no question (at least in my mind) that the transparent parts of the conflict owe a great deal to Volodymyr Zelenskyy, the Ukrainian President. His constant communication with the Ukrainian people, combined with major appearances before parliaments of important states and regions, has united most of the world in support of Ukraine. He has directly addressed the governing bodies or parliaments of the US, England, Germany, Israel, France, and the European Union. He has also addressed the Russian people in their own language (and his), drawing a lot of support from that country’s citizens. In terms of communication, he will be known as one of the most effective wartime leaders in recent history. His background in entertainment is helping him in his role as the leader of the underdog country in a wartime conflict.

However, the supporting world is not willing to help Ukraine with direct military involvement to confront Russia. As I mentioned in the last blog, Russia is home to the world’s largest nuclear arsenal. Fear of escalating this war to WWIII, which might involve the use of chemical, biological, or nuclear weapons, is on everybody’s mind.

Instead, most of the countries that openly support Ukraine have stuck to using major economic sanctions on Russia in an attempt to shift the balance of power.

There is no question in my mind that the endgame of this conflict will leave major impacts on the global balance of powers but the nature of these impacts is still largely in a thick fog.

Meanwhile, we can clearly see major economic impacts on both Russia and the countries that are trying to punish its aggression. Below are a few of the echoes of these impacts:

Impacts on Russia:

Live Updates as Business, Lawmakers and Stocks Respond to Ukraine-Russia War

After shutting down for almost a month, the Russian stock market reopened for limited trading on Thursday. Just 33 companies, all listed in the benchmark MOEX index, were allowed to trade on the Moscow Exchange for four hours and ten minutes.

The MOEX index rose 4.4 percent, but it was probably buoyed by significant government policies intended to avoid a sell-off, including a measure to bar foreigners from selling stocks.

The Russian central bank said on Wednesday there would be a ban on short selling the stocks, a type of trade involving a bet that a company’s share price will fall. Previously, the government had said it would instruct its sovereign wealth fund to channel up to $10 billion into local stocks to stop their prices from plummeting. And in late February, the central bank barred brokers from executing sell orders by foreigners.

Putin to Charge in Rubles for Russian Oil Purchases by ‘Unfriendly Countries’

Economic sanctions imposed by the United States, Europe and their allies have shaken the Russian economy and caused the value of the ruble to plunge.

On Wednesday, President Vladimir V. Putin of Russia came up with a way to get his opponents to help prop up his currency, by demanding that “unfriendly countries” use rubles to buy the Russian oil and gas still flowing.

“I have made a decision to implement in the shortest possible time a set of measures to switch payments for … our natural gas supplied to the so-called unfriendly countries to Russian rubles,” Mr. Putin said.

Sanctions aimed at the Russian central bank effectively froze hundreds of billions of dollars of assets. The actions immediately drove down the value of the ruble as people frantically rushed to turn their rubles into a more stable currency, like the dollar or the euro.

“If you’re invoiced in rubles, you’ve got to go out and buy rubles,” he said. “I don’t know if there is a workaround.”

The German response to this demand was a direct refusal to do so: Germany Won’t Pay Russia in Rubles for Natural Gas, Defying Putin Request.

Total Energies Will Stop Buying Oil From Russia

Total Energies, the French oil and gas company, said on Tuesday that it would stop buying Russian oil by the end of the year and halt further investment in projects in the country.

At the same time, the company warned of the risks and potential negative consequences — for itself and Europe — of a headlong flight from Russia in the wake of Moscow’s invasion of Ukraine.

The Paris-based company said it had “initiated the gradual suspension of its activities in Russia, while assuring its teams’ safety.” Total Energies had said on March 1 that it would halt new Russian investment.

Tuesday’s announcement expanded on that initial statement, describing how the company would no longer enter into or renew contracts to purchase Russian oil and petroleum products, and saying that would it would halt all such purchases by the end of this year. Total Energies also said it would stop providing capital for new projects in Russia, including a large planned liquefied natural gas installation called Arctic LNG 2.

To what extent other companies will follow is still unknown.

Impacts on the parties that imposed the sanctions:

German Chancellor Says Boycott of Russian Energy Would Cost Jobs

BERLIN — A boycott of Russian oil and gas would have severe economic and social consequences in Germany and the rest of Europe, Chancellor Olaf Scholz told lawmakers on Wednesday.

Conceding that Germany has grown dependent on Russia for its energy, Mr. Scholz vowed to end its reliance as quickly as possible, but said: “To do so from one day to the next would mean plunging our country and all of Europe into recession.”

“Hundreds of thousands of jobs would be at risk,” he added, speaking on the floor of the Bundestag, the German legislature.

The United States and some eastern European Union countries, such as Poland and the Baltic States, have been pressuring the bloc to boycott Russian energy exports.

Will War Make Europe’s Switch to Clean Energy Even Harder?

Smoothly managing Europe’s energy switch was always going to be difficult. Now, as economies stagger back from the second year of the pandemic, Russia’s attack on Ukraine grinds on and energy prices soar, the painful trade-offs have crystallized like never before.

Moving investments away from oil, gas and coal to sustainable sources like wind and solar, limiting and taxing carbon emissions, and building a new energy infrastructure to transmit electricity are crucial to weaning Europe off fossil fuels. But they are all likely to raise costs during the transition, an extremely difficult pill for the public and politicians to swallow.

Communication channels are now saturated with the impacts of the Ukrainian conflict, to the exclusion of longer-term threats such as climate change. I will start to return my focus to climate change and related global environmental issues soon. As we saw in the last few blogs, there is no way to completely separate the two but there is a way to shift the emphasis, with the hope that some semblance of peace will return to this corner of the world.

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The Fog of Peace and the Online Revolution

Right now, peace in Ukraine is the top priority for all of us. Both sides are talking compromise, however, the reports are anything but clear. The fog of peace adds to the fog of war, amplifying confusion.

While there seems to be progress in the peace talks, Russia is simultaneously continuing its attack on Ukrainian urban centers, specifically in locations that target civilian populations. The expansion of online communication that has resulted from the global COVID pandemic facilitates talking and shooting at the same time. The fear of escalation hasn’t subsided, either. Below is a section of Thomas Friedman’s piece in the NYT on the topic:

If you’re hoping that the instability that Vladimir Putin’s war on Ukraine has wreaked on global markets and geopolitics has peaked, your hope is in vain. We haven’t seen anything yet. Wait until Putin fully grasps that his only choices left in Ukraine are how to lose — early and small and a little humiliated or late and big and deeply humiliated.

I can’t even wrap my mind around what kind of financial and political shocks will radiate from Russia — this country that is the world’s third-largest oil producer and possesses some 6,000 nuclear warheads — when it loses a war of choice that was spearheaded by one man, who can never afford to admit defeat.

Why not? Because Putin surely knows that “the Russian national tradition is unforgiving of military setbacks,” observed Leon Aron, a Russia expert at the American Enterprise Institute, who is writing a book about Putin’s road to Ukraine.

“Virtually every major defeat has resulted in radical change,” added Aron, writing in The Washington Post. “The Crimean War (1853-1856) precipitated Emperor Alexander II’s liberal revolution from above. The Russo-Japanese War (1904-1905) brought about the First Russian Revolution. The catastrophe of World War I resulted in Emperor Nicholas II’s abdication and the Bolshevik Revolution. And the war in Afghanistan became a key factor in Soviet leader Mikhail Gorbachev’s reforms.” Also, retreating from Cuba contributed significantly to Nikita Khrushchev’s removal two years later.

Bloomberg presents another endgame scenario:

President Vladimir Putin’s war in Ukraine is barely two weeks old, but this time it’s starting to look like an act of retribution that has no obviously achievable endgame. As Russia’s generals shift to ever-more-brutal tactics, it isn’t clear how Putin can marry Ukraine’s devastation with the goals he’s set out: namely, to create a neighbor that’s no longer “anti-Russian” and, in the process, to change Europe’s post-Cold War security order in Moscow’s favor.

nuclear weapons inventory around the world

Figure 1Who owns the world’s nuclear weapons

Nor has the risk of escalation to a suicidal nuclear war disappeared:

  • Russian Foreign Minister Sergei Lavrov he doesn’t think there will be nuclear war over Ukraine.

  • The remark on Thursday came amid high tensions over the West giving Ukraine military support.

  • Putin has made allusions to nuclear attacks and put his country’s nuclear forces on high alert.

Russia’s Foreign Minister, Sergei Lavrov, said that he does not think nuclear war is a likelihood in connection with the country’s invasion of Ukraine.

In comments made to press on Thursday in Antalya, Turkey, he said: “I do not want to believe in it and do not believe it,” as Russian state news agency RIA Novosti reported.

Lavrov had just concluded a meeting with the Ukraine’s foreign ministry, Dmytro Kuleba, in which the sides failed to make any progress towards ending their conflict.

Most likely, a decision to go nuclear wouldn’t  be a rational choice but a move of desperation. Below are two “rational” scenarios for such a development:

  1. Ukrainian pilots, sick of absorbing the killings in their country’s urban centers, decide with whatever equipment they still have, to expand the war across the Ukrainian borders.

Figure 2Russian urban centers beyond the Ukrainian border

Volgograd and Rostov-on-the-Don are likely targets for such attacks. For those of us who are weak on the history of WWII, Volgograd is the renamed city of Stalingrad. The battle of Stalingrad during the second half of 1942, was the turning point in WWII. Now, the city has more than 1 million inhabitants. While Rostov-on-the-Don has a similarly sized population, it is Volgograd that holds a special, justifiably proud corner in every Russian’s heart. Nobody wishes to contemplate the official reaction to any attacks to the city that plays such a large part in Russian identity.

I have no idea (fog of war) of the present status of the Ukrainian air force beyond the fact that it was decimated by the Russians in the opening acts of the invasion but I am sure that enough was left to create havoc on Russia. Ukraine is pushing Poland, which is willing under certain conditions, to provide it with some of the MiG fighter jets left over from the time that Poland was at the center of the Warsaw Pact (more than 30 years ago). One of these conditions was that Washington replenish Poland’s air force with modern fighter jets, however Washington is afraid that doing so would be an act of escalation and has declined the deal.

  1. NATO’s supply chain of non-air force armaments to the Ukraine will provoke a direct Russian attack that NATO will consider as an act of war.

There is a lot of activity now trying to label the situation as the start of WWIII. Indeed, there are some parallels to World Wars I and II. However, the global nuclear arsenal shown in Figure 1 should convince everybody that if such a conflict were to escalate to a nuclear WWIII, it would be the last global conflict between humans and would guarantee the extinction of our (and most other) species.

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“Peak” Oil:  Self-Limiting or Open-Ended?

The Age of Oil started around 1800, when drilling techniques started to become available to extract oil from the ground. Figure 1 shows the oil price changes normalized to a constant US$ (2014) from the American Civil War until 2015. Global events that had direct impact on the price are superimposed on the graph. Figure 2 shows the changes in the price of oil over the last year and the impacts of two such global events: COVID-19, and Russia’s attack on  Ukraine. Figure 1 also shows oscillatory behavior of peaks and valleys and stable periods when prices stay relatively low. The fluctuations in oil prices are a constant topic on this blog. (Just put “peak oil” in the search box to examine the issue). The title of this blog asks the question – is today’s behavior any different?

Figure 1 – Oil prices in constant US$ (2014), from the civil war to 2015 (Source: World Economic Forum)

As Figure 2 shows, the recent rise in oil prices started well before Russia’s invasion of Ukraine and even before the threat of invasion started around November of last year. It was driven first by the COVID-19-related difficulties of adjusting global supply and demand, then strongly accelerated after the invasion.

Figure 2 – Oil prices over the last year (Source: Bloomberg)

Below is a piece written on the issue before the invasion that basically raises the same question that I am asking in this bog: are the increases self-limiting or open-ended?

“The only way to balance this market over the medium term remains high oil prices to slow demand growth,” analysts at Energy Aspects wrote in a note to clients this week cited by Bloomberg.

Bringing more supply, on the other hand, is now more challenging than before the pandemic. ESG issues and the energy transition for the international majors, as well as the new-found and still-largely-holding capital discipline of U.S. shale producers, combine with supply chain bottlenecks, labor shortages, and cost inflation. $100 oil could unleash a lot more U.S. oil production, in theory, but supply chain constraints and record-high frac sand prices are likely to temper growth, analysts at Rystad Energy say.

However, a few days after the invasion, it became clear that the present increase is not only driven by COVID-19 difficulties in the supply chain. Rather, they relate to a strong attempt by most of the world’s countries to slow the Russian attack on Ukraine. As I mentioned in a blog last month (February 8, 2022), Russia is a petrostate with an economy strongly dependent on energy exports. Meanwhile, Europe’s economy relies heavily on energy supply from Russia. Boycotting Russian energy exports is bound to have a strong and complex impact on the global economy.

There are a few options for mitigating the major changes that are now taking place in the global energy supply:

  1. Major increase in drilling and distilling outside of Russia.
  2. Decrease in the energy intensity (energy/GDP) and increase in energy efficiency in various uses of energy.
  3. Increase the use of non-fossil energy sources.

Options 2 and 3 are consistent with ongoing attempts to mitigate climate change, but option 1 is not.

Price increases are the natural economic way to shift the energy use in all three directions without policy interventions. It looks like all three mechanisms are now playing a role, with price increases probably dominant among them.

Hopefully, in future blogs, we will be better able to answer the title question of this blog and I will examine in some detail the present disruption’s impacts on our energy use. In this blog, I will mostly refer to early comments of some published opinions on these issues.

Accelerated Shift to Renewables

Europe:

MILAN, Feb 28 (Reuters) – Shares in European renewables companies rallied in turbulent markets on Monday on bets that the region would accelerate transition towards alternative sources of energy as governments seek ways to reduce reliance on Russian gas imports.

Shares in Nordex (NDXG.DE), Vestas Wind (VWS.CO), Siemens Gamesa (SGREN.MC), Orsted (ORSTED.CO) and EDP Renovaveis (EDPR.LS) rose by between 5% and 12% as investors sought bigger exposure to the sector ahead of top-level discussions in Europe on energy security.

German Chancellor Olaf Scholz on Sunday called for faster expansion of renewable energy after his country halted the $11 billion Nord Stream 2 gas pipeline project following Russia’s invasion of Ukraine. read more

“Policy changes in Germany and the spike in natural gas prices following recent events could now lead to a step change in how Europe, especially Germany, accelerates renewable energy plans that are currently behind schedule in many countries,” Citi analysts wrote in a note on Monday.

Effect of Renewables on Grid Stability:

Contemporary proliferation of renewable power generation is causing an overhaul in the topology, composition, and dynamics of electrical grids. These low-output, intermittent generators are widely distributed throughout the grid, including at the household level. It is critical for the function of modern power infrastructure to understand how this increasingly distributed layout affects network stability and resilience. This paper uses dynamical models, household power consumption, and photovoltaic generation data to show how these characteristics vary with the level of distribution. It is shown that resilience exhibits daily oscillations as the grid’s effective structure and the power demand fluctuate. This can lead to a substantial decrease in grid resilience, explained by periods of highly clustered generator output. Moreover, the addition of batteries, while enabling consumer self-sufficiency, fails to ameliorate these problems. The methodology identifies a grid’s susceptibility to disruption resulting from its network structure and modes of operation.

However, not everyone agrees that the shifts accelerate the energy transition away from fossil fuels:

The surge in crude oil prices past $100 a barrel has raised a big question: Will this latest spike in the notoriously volatile oil market help to speed the global transition from fossil fuels to cleaner energy sources to fight climate change?

The answer is probably not.

On the one hand, energy analysts say, soaring prices for gasoline, diesel and other products made from crude oil will drive cost-conscious consumers more quickly into electric vehicles and boost investment in competing clean technologies like hydrogen.

But at the same time, these high prices will also drive more drilling of oil and gas around the globe, as fossil fuel companies rush to cash in, sowing the seeds for the boom to turn to bust. That will make oil abundant and affordable again.

That is a pattern that the world has seen repeatedly in the oil age, and one that has punished clean energy investors harshly in the past.

More Drilling Outside Russia:

US to Push More Drilling at Home:

“As crisis looms in Ukraine, U.S. energy leadership is more important than ever,” the American Petroleum Institute, the powerful industry lobby group, wrote on Twitter with a photo that read: “Let’s unleash American energy. Protect our energy security.”

The crux of the industry’s argument is that any effort to restrain drilling in America makes a world already reeling from high oil prices more dependent on oil and gas from Russia, a rival and belligerent fossil fuel superpower.

The industry’s demands have focused on reversing steps the Biden administration has taken to start reining in the production of fossil fuels, the main driver of climate change.

Arguments in the Organization of the Petroleum Exporting Countries (OPEC):

With the price of a barrel of oil soaring, the group of oil producers known as OPEC Plus declined to take steps to cool the market at its monthly meeting on Wednesday.

In a statement that had surreal qualities given the surging prices in recent weeks, the group, which includes Russia, said current fundamentals and the outlook for the future pointed “to a well-balanced market.”

It blamed “volatility” on “geopolitical developments” — in other words, Russia’s onslaught in Ukraine.

Some analysts were not impressed. “Such an argument will increasingly strain credulity,” Helima Croft, an analyst at RBC Capital Markets, an investment bank, wrote in a note to clients.

Adjustments in the European Unionw

EU to Phase Out Russian Gas, Oil, Coal Imports – Leaders’ Draft

BRUSSELS (AP) — The European Union is seeking to fully phase out its dependency on Russian energy “well before 2030” to ensure the 27-nation bloc no longer faces difficult decisions about hurting their own economies in geopolitical crises like the invasion of Ukraine.

The EU leaders meet in Versailles outside Paris for a two-day summit starting Thursday and will be working on ways to reduce their dependency on Moscow for fossil fuels.

“We agreed to phase out our dependency on Russian gas, oil and coal imports,” said a draft of the summit declaration seen by The Associated Press.

At the same time, the European Commission already has proposals to make it happen. The EU’s executive arm said its measures “can reduce EU demand for Russian gas by two-thirds before the end of the year” as a first

To summarize:

I will go back to the title, where I ask whether “peak oil” is self-limiting or open-ended. Answering this involves trying to predict the future and the future now is complicated. We can predict some of the components: climate change is not self-limiting but it can be limited by our collective mitigation efforts to de-carbonize the atmosphere. The timing depends on our mitigation efforts, as measured in generations. COVID-19 is on its way out. The big unknown is the endgame of the Russian-Ukrainian conflict, which is now having major impacts on energy availability. My next blog will try to come up with some answers.

However, with a nation of 45 million being destroyed by its more powerful neighbor that has, so far, resulted in more than 2.5 million (and growing) mostly women and children, forced to escape the country and flooding into the rest of Europe, we shouldn’t worry too much about the price increase of gasoline.

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Fog of War: A Dark Sky

 (Source: EverEdge)

Unsurprisingly, this blog will be a continuation of last week’s post, focusing on the Russian invasion of Ukraine. As with almost all wars (I took part in a few) the “fog of war” has already taken over and it is not easy to discern the truth. The rattle of nuclear escalation continues and Russian Foreign Minister Lavrov’s remarks that the country has a nuclear doctrine and is not run by insane people was not very convincing to many outside Russia. The belief in the Russian command and control system is shaky and it includes doubts about how much Lavrov actually knows President Putin’s thinking.

One example of the fog has to do with the state of Ukraine’s power reactors. We see some coverage that focuses on those that have stopped working and indicates a correlation with the Russian invasion:

Six of Ukraine’s 15 working nuclear reactors have stopped sending power into the nation’s electrical grid — a high rate of disconnection compared with routine operations before the Russian invasion. The reduction in output might result from the war’s interference with operation of the plants, which require a wealth of industrial supplies and care. The cutbacks, Western experts say, may spiral into rolling blackouts that could further cripple the beleaguered country.

However, we see the same issue presented in a way that stresses the safe, stable condition of the reactors that are functioning:

The State Nuclear Regulatory Inspectorate of Ukraine, in its update at 08:00 local time (06:00 GMT) on Monday 28 February said, there have been “no violations” of nuclear power plants’ “safe operation limits and conditions”.

The brief update from the regulator also said: “Radioactive situation meets established norms. Systems of NPP physical protection work in normal mode. NPP security divisions and physical protection services are on high alert.”

It said nine of the country’s 15 nuclear units were connected to the grid on Monday.

One day later we saw some “light” (fire) through the fog! Again, various news outlets presented different perspectives.

Reuters:

LVIV, Ukraine/KYIV, March 4 (Reuters) – Russian invasion forces seized Europe’s biggest nuclear power plant on Friday in what Washington called a reckless assault that risked catastrophe, although a blaze in a training building was extinguished and officials said the facility was now safe.

The New York Times:

LVIV, Ukraine — In darkness, Russia captured Europe’s largest nuclear power plant on Friday in Ukraine, prompting questions about the reasons it invaded the sprawling reactor site as well as the health risks to Ukrainians fighting desperately for their lives and freedom.

And it’s not the only power plant in Ukraine that could face attack by Russian forces. Some troops already appear to be marching toward another facility west of the Zaporizhzhia power plant, a Ukrainian energy official said.

For the moment, the Zaporizhzhia nuclear complex appears safe, with the plant’s array of sensitive detectors finding no releases of radioactivity above the usual background levels.

As I mentioned in last week’s blog, Russia is experiencing heavy global penalties for its un-provoked invasion. I am not referring to direct fighting back with guns and bullets; that has so far only involved Ukrainians and a few brave volunteers. However, the fog that is associated with the impact of the global sanctions on Russia is even thicker than the one that hangs over Ukraine. I addressed some of the impacts, such as the catastrophic fall in the stock market, the value of the ruble, and the country’s creditworthiness in last week’s blog. Since then, its stock market was closed for a week, and communication from Russia has been heavily censored. However, what is happening to Russian properties outside Russia has been much more transparent.

Stocks

Market Watch:

The dollar-denominated secondary listings of Russian companies continued to plunge on the London Stock Exchange on Wednesday, as the local Russian stock market remained shut for a third day. Lukoil LKOD, shares dropped 93%, Novatek NVTK, dropped 77% and Rosneft Oil ROSN, collapsed by 58%. X5 Retail FIVE, , [sic] however, surged 58%. Sberbank SBER, , Russia’s number-one lender, traded as low as a penny.

The Guardian:

The London Stock Exchange has suspended trading in 27 companies with strong links to Russia, including the energy and banking firms Gazprom and Sberbank.

The LSE said it was moving to block trading in the companies that include Severstal, Russia’s largest steel and mining company run by Alexei Mordashov, the country’s richest man.

Also barred are the aluminium company EN+, whose owners include the oligarch Oleg Deripaska, state-controlled Gazprom, the world’s largest gas producer, Rosneft and VK, the parent company of social networking sites including VKontakte, which is bigger than Facebook in Russia.

The list also includes the fertiliser company PhosAgro, which is chaired by former LSE chief Xavier Rolet and has shareholders including the billionaire Andrei Guriev, who owns Witanhurst in London’s Highgate, the largest private house in the capital and second in size only to Buckingham Palace.

Also barred are the energy firm Lukoil, Russia’s largest gold producer Polyus, which is controlled by the family of Suleiman Kerimov, as well as Sberbank, the country’s biggest lender, and Novolipetsk Steel, one of the four largest steel companies in Russia.

Oil Trade

Reuters:

LONDON, March 1 (Reuters) – Russian oil trade was in disarray on Tuesday as producers postponed sales, importers rejected Russian ships and buyers worldwide searched elsewhere for needed crude after a raft of sanctions imposed on Moscow over the war in Ukraine.

Numerous nations imposed sweeping sanctions against Russian companies, banks and individuals following Russia’s invasion of Ukraine last week and global majors announced plans to leave multi-million-dollar positions in Russia.

In addition, the price of oil has risen above $110/barrel—a 10 year high (As Oil Soars, OPEC and Its Allies Are Not Likely to Offer Relief). We still don’t know what the full impact of the soaring prices will be. Next week’s blog will try to explore whether such a peak in oil price is self-limiting or open-ended.

To add to our collective miseries, the second of the IPCC AR6 reports on the state of climate change became available at the end of last month: “Climate Change 2022 – Impact, Adaptation and Vulnerability.” The report contains 3675 pages, so I seriously doubt that anybody will read it cover to cover. Newspapers around the world have started to cherry-pick pieces relevant to the readers that they serve. I will do the same and ask my students to go over a few sections that I deem important, then elaborate on some of the cherry-picking in future blogs.

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