Energy sanctions against Russia

You’re probably following news on the Russian invasion of Ukraine and wondering if there’s anything you can do. There’s a range of actions you can take, including various forms of support for the Ukrainian people, but I want to focus on one thing: energy sanctions against Russia. As you probably know, the introduction of economic sanctions has been the main approach taken by the rest of the world, so far. But as Bill McKibben pointed out in his opinion article on The Guardian on Friday, the Russian economy is mainly based on energy – oil and gas.

It is a war underwritten by oil and gas, a war whose most crucial weapon may be oil and gas, a war we can’t fully engage because we remain dependent on oil and gas. If you want to stand with the brave people of Ukraine, you need to find a way to stand against oil and gas.

Today, 60% of its exports are oil and gas; they supply the money that powers the country’s military machine. And, alongside that military machine, control of oil and gas supplies is Russia’s main weapon.

How dependent are we on Russian oil and natural gas?

In Europe, Germany is making the tough but correct decision to suspend approval of the Nordstream 2 pipeline, owned by Russian natural gas corporation, Gazprom. In the US, there’s no sign yet of cutting down on Russian oil and natural gas imports.

The United States imported more gasoline and other refined petroleum products from Russia than any other country in 2021, accounting for 21% of US gasoline imports. – Forbes

So the US is somewhat dependent on Russia for petroleum products (and about 3% of crude oil imports) while Europe is dependent on natural gas, with around 40% of gas piped into Europe coming from Russia. And so on, around the world – everyone is interdependent in some way, which can actually be pretty good for ensuring political stability, most of the time.

It also means that imposing some sanctions can be tricky. However, I believe that imposing sanctions on Russian energy is a necessary step that can actually bring upsides.

The US should impose Energy sanctions on Russia

The main reason why the US does not want to impose energy sanctions on Russia is that reduced oil imports will likely increase fuel prices, “hurting the economy” and making voters unhappy.

However, the argument that rising fuel prices will hurt the economy is a weak one, when you really think about it. You know what will really hurt the economy? The use of nuclear weapons or bioweapons, and a maniac (who most analysts agree, does not want to stop with Ukraine) left unchecked! We’re saying that we don’t want to stand up to this guy quite so much because it’s inconvenient that petroleum prices will rise?

Of course care needs to be taken – I can see the rationale for not imposing banking sanctions (yet) but I think that the prospect of energy sanctions actually provides an opportunity to bite the bullet and do something that we should already be doing. As McKibben points out in The Guardian, reducing our dependence on oil is supposed to be a top priority anyway – climate change and pollution from the fossil fuel industry are already major threats to civilization.

When you consider all of that, isn’t this a great opportunity to do the right thing on several fronts?

McKibben paints a picture of the world finally getting its act together to build alternative energy systems (wind and solar, mainly) to replace most of our fossil fuels. During World War II, massive programs were quickly ramped up to do everything necessary to defeat the Axis aggressors. Huge sacrifices were made by civilians who had to adapt to reduced availability of food and materials (and of course, the air raids).

What can you do to help?

Here’s a list of actions that you can consider taking, no matter where you live. They are all related to the tactic of energy sanctions against Russia, which I believe should be imposed as soon as possible.

1. Reduce your consumption of oil and natural gas

Drive less, turn down your thermostat and wear a sweater. Get used to the fact that fuel prices will likely rise. Be prepared to make some sacrifices and think about the huge sacrifices that were made to defeat the Nazis.

2. Invest in alternative energy companies

There are many companies around the world creating new alternative energy facilities. Many of them raise capital by issuing new shares instead of borrowing from banks. In return they pay dividends to shareholders.

It’s really a nice system and these companies are creating real change. For example, Algonquin Power & Utilities (NYSE:AQN) bought American Electric Power’s operations in Kentucky, with the goal of bringing renewable energy to a state that mainly relies on fossil fuels.

You may not have money to invest but perhaps you have a retirement account – in which case I’d recommend rolling it over into a personal IRA so that you have more options. That’s what I did for mine – even though it was run by UC Berkeley it had limited options on the ethical front.

Individual companies that I like include Hannon Armstrong Sustainable Infrastructure (HASI), Clearway Energy (CWEN, CWEN-A), Atlantica Yield (AY), Next Era Energy Partners (NEP), and Algonquin (AQN). There are also ETFs and mutual funds that include baskets of renewable energy producers, such as RNRG and NALFX, respectively. (Disclosure: I own stock in all of these, except for NALFX and HASI, which I may own in the future).

3. Choose a renewable energy provider

I covered this in previous post on my local renewable energy provider, East Bay Community Energy (EBCE). Basically, I’d recommend looking up your local electricity providers that use renewable energy and subscribe to them. The cost of renewable electricity from EBCE (provided by Clearway Energy, mentioned above) is actually no higher than the conventional energy mix from PG&E.

4. If you buy an appliance or house, choose electricity over gas

Electricity still comes from a mix of renewables and fossil fuels such as coal. However, it’s gradually being decarbonized so if you’re thinking of buying a new cooker, water heater, etc., it’s a good idea to choose electrical power over natural gas.

In fact, my adopted city of Berkeley voted in a new program in November 2021 to electrify homes. New homes are required to use electricity rather than natural gas for major appliances and programs are coming in to help transition existing homes too.

Beneficial Building Electrification is the substitution of gas appliances (furnaces, water heaters, cooking ranges and stoves, dryers, etc.) with clean, safe, and highly efficient all-electric alternatives in a way that results in reduced greenhouse gas emissions, more grid resiliency, and lower energy costs for residents.

5. Switch to a plant-based diet

This is not so obvious, but critical all the same. The meat industry is a major driver of oil and natural gas dependency. To look at just one aspect, the nitrogen fertilizer applied to most crops is primarily made from natural gas. Feeding crops to animals and then eating the animals is a highly inefficient use of energy. You’ll definitely see prices of meat increase in response to rising energy costs, so consider it a good time to cut down!

These actions are designed to soften the impact (on us) of energy sanctions against Russia. But remember they are also key actions in dealing with some of our other major global issues:

• Climate change
• Pollution from the fossil fuel industry
• The need for a fast transition to renewable energy

It’s a win-win and it’s the right thing to do.

If you’re an apologist for fascism, high gas prices are your first go-to move.

– Bill McKibben, The Guardian