Dealing With Russia: Can Europe Afford an Embargo?

Dealing With Russia: Can Europe Afford an Embargo?| Future Business

Number crunching

So, can the EU actually afford to do all this? Well, IEA stats say an additional 35 TWh of generation from new renewable projects over the next year, over and above the already anticipated growth from these sources, brings down gas use by six bcm. Remember, in 2021 total EU natural gas imports were 155 bcm.

These new renewable projects also mean opportunities and jobs in the green supply chain, and in running the new green energy plants.

Alternative sources of gas can bring in around 30 bcm in additional gas supply from outside Russia. The price of this and the security of supply remain unanswered.

Nuclear expansion and bioenergy can add an additional 70 TWh of power generation from existing dispatchable low emissions sources, reducing gas use for electricity by another 13 bcm. Suddenly, at this point, almost a third of the Russian 155bcm (49 bcm) of gas has been accounted for.

So, perhaps this can be done affordably, ethically and sustainably after all.

Future trends

It certainly appears that on energy, Russia’s behaviour has fundamentally redrawn the status quo. The BBC reports that Shell pledged to stop buying oil from Russia as it apologised for its purchase of cheap Russian crude.

The energy giant also said it would close all its service stations in the country and stop all current work there. Shell came under huge criticism after it purchased a cargo of Russian crude at a discounted price.

Its boss said, however, that it was wrong to buy Russian oil. “We are acutely aware that our decision to purchase a cargo of Russian crude oil… was not the right one and we are sorry,” Mr van Beurden said.

It’s not just about energy. More than 400 companies have announced their withdrawal from Russia since the start of the war, according to a tally by Professor Jeffrey Sonnenfeld and his research team at the Yale Chief Executive Leadership Institute.

Video sharing site TikTok, social media platforms Facebook, Twitter and Instagram and streaming giant Netflix have limited and cut their services in Russia; TikTok said it had suspended live streaming and new content from its platform as it assesses tough new laws to crack down on fake news about Russia’s armed forces. Netflix too said it was pulling out in protest at the invasion while Visa, Mastercard and PwC also joined the list of western firms cutting ties.

Travel agents and Airbnb have halted operations in Russia, and comms companies including Nokia, Ericsson and Oracle have suspended trading.   

And cryptocurrency trading platform Coinbase has blocked 25,000 wallet addresses related to Russia. The platform said the addresses were related to Russian individuals or entities it believed to have engaged in illicit activity. The addresses were blocked over fears cryptocurrency could be used to evade sanctions.

In catering, McDonald’s, Coca-Cola, Starbucks and Heineken have suspended Russian operations, and about the only significant holdout is Burger King, which says it has been unable to force its 800 franchisees in Russia to shut down operations.

Oil news

Just as this article was going to press, the IEA announced an addition; a 10-point plan to cut oil use. It said in the face of the emerging global energy crisis triggered by Russia’s invasion of Ukraine, practical actions by governments and citizens in advanced economies and beyond can achieve significant reductions in oil demand in a matter of months, reducing the risk of a major supply crunch.

These efforts would reduce the price pain being felt by consumers around the world, lessen the economic damage, shrink Russia’s hydrocarbon revenues, and help move oil demand towards a more sustainable pathway.

If fully carried out in advanced economies, the measures recommended by the 10 Point Plan to Cut Oil Use would lower oil demand by 2.7 million barrels a day within four months; equivalent to the oil demand of all the cars in China.

It seems the business and energy shutters are fully closing on Russia. FutureBusiness will report fully on the IEA oil plan shortly.

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