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Monthly Archives: October 2021

The Effect of Climate Change on the Russian Economy


With an export value of 33.7 billion U.S. dollars in crude oil to China alone in 2019, the Russian economy is heavily dependent on oil trade. However, due to the increase in the overall Russian climate, the oil industry is experiencing complications. As one of the primary sources of income for Russia’s economy, its government has made and will continue to make significant efforts to curb the effects of the complications and prevent future problems. The increase in climate temperature has damaged the infrastructure of the mines and plants responsible for oil production, creating a need for a redirection of funds and potentially dangerous environmental effects, thus, narrating a cautionary tale to other nations with similar carbon emissions rates.

For policymakers to understand the crucial economic role of oil, it is critical to note that in 2014 the Russian exchange rate changed to a floating exchange rate directly affected by the price of oil. Changes in the international economy and sanctions placed on Russia in response to the war with Ukraine had negative consequences on the economy in Russia. President Vladimir Putin has spent much of his fourth term as president focused on macroeconomic stability. Oil was a significant contributor to the proposed solutions.

Permafrost makes up the foundation of nearly 65% of the developed Russian land, land that experts consider so frozen that it is “permanently frozen” and largely considered as secure a foundation as a rock. However, the overall temperature in Russia has increased by 0.92 degrees Fahrenheit. This change has led to sections of permafrost melting, including sections of permafrost that oil mines and plants have been built on. Structure shifting in response to melted permafrost has created cracks and fissures in pipes and storage units used for crude oil production. Large spills create additional environmental complications and challenges to local populations, who are already experiencing difficulties due to the change in permafrost stability. For example, many apartment buildings in Yakutsk, Russia have reported significant cracks and other damages that have made the buildings unsafe and unfit to be inhabited.

Russia has often been criticized by international organizations and NGOs for the methods by which they calculate its carbon emissions. There has also been criticism and scrutiny over the dedication and effectiveness of policies enacted in Russia to reduce greenhouse gas emissions. With the economy heavily reliant on oil trade, there has been little incentive to thoroughly change the methods by which oil and industrial production are managed in the past. However, the threat to oil production, and therefore a staple in the Russian economy, has increased the incentive and immediacy of necessity to change the greenhouse gas emission rate. Since July of 2021, Russia has declared plans to decrease carbon emission by 36% by the year 2030, and an additional 12% by the year 2050. In the meantime, the government has a devoted interest in maintaining the functionality of the damaged oil plants. This will be carried out by the redirection of funds to repairing infrastructures of mines and plants responsible for oil production, along with funds used to address oil spills and subsequent environmental impacts of those spills.

Negative consequences on the Russian economy serve as a cautionary tale to other countries with high greenhouse gas emission rates. Russia ranked fourth of nations with the highest carbon emissions, proceeded only by China, the United States, and India. Based on data gathered for greenhouse gas emissions in 2019, Russia had contributed 4.71% of the world’s carbon emissions. The United States had contributed 13.43% of the world’s carbon emission, nearly three times the amount of carbon emission produced in Russia. While the U.S. has not had as dramatic an effect from their carbon emission and consequential environmental impacts, there is reason to evaluate future proceedings with this warning in mind.

Discussions on how to proceed with energy production are already an important topic of discussion by members of congress. Potential threats to the U.S. from climate change primarily target coastal cities, due to rising sea levels and increased storm intensity. However, changing energy source methods would require large amounts of funding and restructuring of the energy industry. Divisions in Congress and the U.S. population have prevented decisive action to be taken in pursuit of a solution. From events in Russia, it can be inferred that two categories of action may be taken. Either government funds can be addressed to changes in living conditions and other adverse reactions to climate change when those reactions impede economic production, or funds may be directed to establishing renewable energy sources with lower cost to the environment before production and living quality is threatened. Future proceedings can be expected to require significant funding with the proceeding of either course, but how those funds are directed and how much may differ between the two.