Of Babushka Dolls and Chinese Puzzles

In 1939 Winston Churchill described Russia as ‘a riddle, wrapped in a mystery, inside an enigma.’ Much the same applies to its role in climate negotiations. There are many layers to Russian positions, such that it is a veritable Babushka Doll, with many layers of interests and meanings.

Inside the ‘climate change doll’ lie several important interest-based dolls, although all the dolls are relatively transparent, if one is prepared to look. It is impossible to understand the dynamics of what will happen in Glasgow, without understanding the leverage Russia has now achieved over Europe through its supply of gas. The other major factor is China, on which more below.

The dependence of Western Europe on Russian gas is no accident, but the result of clever Russian strategy. Russia, too, had windfall reductions in greenhouse gas (GHG) emissions with the post-Communist collapse of industry, and other parties were wary of Russian ‘hot air’ in emissions trading schemes. Putin also carefully placed Russia as the pivotal State party whose ratification would trigger the entry into force of the Kyoto Protocol, extracting promises of investment in the Russian gas industry from those in the City of London who were keen for emissions trading to commence so they could reap the substantial profits on offer.

Russia has been careful to maximise Western European dependence on its gas exports, even to the extent of recruiting former German Chancellor Gerhard Schröder, who approved a €1 Billion guarantee for the Nord Stream gas pipeline on 24 October 2005 – just weeks before he relinquished office. He was then recruited to Nord Stream and in 2016 he was appointed manager of Nord Stream 2, and then to the board of the largest Russian oil company, Rosneft – at a time when it was under western sanctions over Russia’s role in the Ukraine crisis. The US under Trump also supported sanctions, but Biden has waved Nord Stream 2 through.

Disputes between Ukraine and Russia in 2006 and 2009 resulted in Russia stopping gas supplies to Ukraine and thus to European nations that were the at the distant end of the Brotherhood and Soyuz pipelines that flowed through Ukraine. Several alternatives that might have reduced reliance on Russia have not been developed.

Western Europe sits on top of massive shale gas reserves but governments, in the face of pressure from NGOs, have forbidden their exploitation. It was reported in 2014 by the Secretary-General of NATO that Russia was providing support for the political movement against fracking to exploit substantial indicated shale gas resources that might have lessened Western European reliance on Russian gas.

Both the UK and the EU continue to use the base year of 1990 for their emission reduction targets, which is convenient for them, but the advantage gained from the structure of global policy is even more fundamental than that. Climate change is not fundamentally a question of flows of GHGs (yearly consumption), but of stocks (cumulative consumption from all preceding years). The pre-eminent GHG, CO2, is estimated to have a residence time in the atmosphere of 100 years. Responsibility for elevated GHG levels is thus time related, and the UK and the EU (including Germany) industrialised on the basis of coal earliest – earlier even than the US.

Focusing on flows, rather than stocks thus glosses over this reality, and during the negotiation of the Kyoto Protocol Brazil suggested this feature be included, but it got nowhere in the face of the coalition between the EU and the developing countries, represented by G-77 plus China.

The exemption for developing countries from obligations and the promises of $100 Billion per annum in assistance made at Copenhagen have been the costs of securing their agreement. China has managed to continue as a ‘developing country’ for climate purposes, even after President Xi has otherwise abandoned this designation and heralded its rise as a major power.

China accepted a Nationally Determined Contribution at Paris for its GHG emissions to peak in 2030 and promised to achieve Net Zero in 2060, but its conduct since Paris certainly signals an intention not to be unduly constrained by such undertakings.

Much is made by the enthusiasts for renewables of the rapid expansion of solar and wind capacity in China, but it is coming of a very low base and is dwarfed by the expansion in nuclear capacity and a huge expansion in coal mining and coal-fired electricity. There is currently 250 GW of new coal-fired plant under construction — a 25% increase on current capacity. It is also more than the current installed capacity of the United States (229 GW). Fortunately, much of this is using best available technology: the Pingshan power plant phase two (1350 MW) was commissioned in December 2020.

The current energy crisis in Europe has seen requests to Russia for more gas and coal. Russia has also agreed to supply China with more gas, and during 2020 China entered into three long-term oil and gas agreements with Iran, Abu Dhabi and Saudi Arabia. The current crisis surrounding energy security in Europe has occurred where decarbonisation has been pursued most vigorously

Despite green groups claiming for years that coal and other other fossil fuels are becoming stranded assets (without value because they can no longer be sold), Newcastle coal has quadrupled in price, and Netherlands natural gas has risen seven-fold.  

China has suffered from its boycott of Australian coal and is now responding to its shortages and appears to be loading up on GHG-emitting capacity before 2030. Since it already produces 27% of global emissions its actions — together with those of Russia and India and the developing world – are crucial if Glasgow is not to descend into farce. It has agreed, under US pressure, to desist from its substantial financing of coal-fired plants offshore, but then its wind and solar manufacturing industries will be assisted by this (if, indeed, it honours its promises).

Gwythian Prins, Emeritus Professor at the London School of Economics, has recently written an insightful essay that both warns of the dangers of a Net Zero world and the way in which it advantages China. It should be required reading for every political and business leader believing current climate fictions, including that batteries can meet our need for motive power. The reality that a farm tractor would require a battery equal to its own weight to replace its tank full of diesel should be a sobering thought for the battery enthusiasts, who, he adds, cannot legislate to overturn the laws of thermodynamics. It is difficult to guess whether the greater danger lies in China agreeing to a deal in Glasgow or simply refusing do agree to new restrictions, but the Chinese puzzle must be understood – if not solved.