February 2022 saw the Russian government commence an invasion of Ukraine. Certainly, all people of goodwill can recognise the injustice of these events - including millions upon millions of regular Russian people who totally disagree with the actions of their government - and wish for Ukraine to return to daily life as a free society as soon as possible. Every conflict like this of course has its own unique circumstances, but they also form part of a broader context. Accordingly, when it comes to considering the 2022 invasion of Ukraine in context, the dynamics surrounding renewable energy and natural resources are indeed part of a wider discussion that should be had.
At time of writing hostilities are still occurring in Ukraine, and so it’s right and appropriate that the most urgent focus of public leaders is on ending these. Yet it’s also the case that world leaders are not only tasked currently with that job, but also devising a strategy for what Ukraine, Russia, their respective countries - and the international community as whole - shall look like once this conflict ends. In this regard, the reality is there are lessons to be learned from this shocking turn of events, and it’s worthwhile that they are detailed now.
In order to understand why this crisis has occurred in 2022 it’s necessary to briefly recap the history of the relationship between Russia and the Ukraine. More expansive discussion of the two nations’ history can be found elsewhere, but in a nutshell both countries were part of the USSR whose government ruled out of Moscow, which is today the capital of Russia. Since the breakup of the USSR - ultimately finishing in December 1991 - Ukraine and Russia have been separate countries, with the former today operating under a democratic model of governance, and the latter doing so until the rise of its current leader Vladimir Putin. First ascending to the Russian presidency in 2000 - after being appointed prime minister in 1999 - Putin has since then firmly shifted Russia to being ruled under an authoritarian model, with a democratic veneer.
Although these nations are today separate, Putin and his colleagues in the Russian government hold the view Ukraine should rightfully be a part of Russia - or at least under its control as a satellite state - and has made moves in recent years to try and gain control of territory once again that Moscow previously ruled via the USSR. In 2014, it illegally invaded and annexed Crimea. It was in 2014 that the Russian government-backed conflict in the Donbas region of Ukraine commenced too. Russian interest and involvement in these episodes is owed to a number of factors, but the push by many Ukrainians to see their country move towards a closer connection with European nations to the west of it - and ultimately to join the European Union - is regarded as a key reason for Russia’s push to destroy any sense of Ukrainian independence, and to bring it under the control of Moscow’s rule once more. Yet old territorial links are certainly not the only reason for this current invasion, nor the actions by Russia towards Ukraine in the past decade.
History is littered with conflicts that are driven by the quest for natural resources. It’s little surprise the invasion of Ukraine by the Russian government has quickly attracted criticism for being motivated (in addition to other factors) by this desire. The fact is from an economic point of view Russia today finds itself in a very difficult position, given there’s no doubt its major industries of oil and gas are set to experience a sharp decline in the years ahead. Put simply, with European nations eventually going to become 100% green in their energy production - alongside seeing a far greater use of goods like EV vehicles - the market for these Russian exports is set to fall off a cliff.
Nonetheless, by invading Ukraine and seeking control of its fossil fuel resources, Russia can look to maximise its output in these areas, while demand remains high in the present era. In addition, Ukraine also holds substantial reserves of lithium, among other resources. With this in mind, it can be said the Russian government incursions in Ukraine can (from their strategic perspective) represent ‘the best of both worlds’.
They can not only look to gain greater control over the supply chain for fossil fuels, but also lithium. So, they can continue to reap massive profits from fossil fuels while they remain in use, and also stand to benefit from the growing demand for lithium in future, especially as the amount of people that use digital devices with rechargeable lithium-ion batteries across the world - and the number of digital devices each person uses - is set to increase significantly in the years ahead. This is owing to the rapidly rising wealth of developing nations which will see access increase to these goods for millions - if not billions! In turn, nations with a high rate of digital device use already will become even more digitised, thereby increasing their use of digital goods overall too - and this of course means an even greater demand for lithium-ion batteries.
In assessing this issue as a whole, it’s of course necessary to factor in other elements. There is no doubting other factors - such as the security of territory, historical claims and connections - also inform the basis of the current conflict in Ukraine. Stating this certainly does not seek to suggest an invasion based on these elements are valid, but just instead that this conflict is indeed a complex one, and so it’s important to clearly recognise - even if a quest to conquer land and seize resources is a major factor - it is not the only one. Ultimately, it’s essential in our era where so much news is obtained via clickbait headlines and soundbytes that a misleadingly simple answer for why this invasion occurred should not be allowed to become the accepted history, for what is ultimately a very complex conflict. Undoubtedly natural resources are a major factor in this conflict, but not the only one.
Similarly, the realities of history, of (bad) human behaviour, and in turn that fact that more work remains to be done among governmental channels in future to try and prevent conflicts like this, illustrate that anyone currently looking at Ukraine and envisioning this will be the last conflict where natural resources loom large as a key element, sadly face significant odds they’ll be wrong. Yet just the same, there can be no doubt that countries which pursue energy independence with renewables more rapidly not only stand well-placed to better shore up their security at home, but also to support friends and allied nations which find themselves vulnerable to hostility.
On this basis, although the causes of the 2022 Russian-Ukrainian conflict are complex, there can be no doubt if Europe and the wider world obtained a higher degree of energy independence from Russia in the years prior, there would have been greater scope to seek to ‘push back’ and deter the Russian government from starting down this path over the past decade. Similarly, the past and present capacity of the Russian government to - or even just threaten to - inflict further harm by cutting energy supply to European nations would also have been reduced, if said nations enjoyed a far higher presence of renewables in their energy mix. Noting this does not seek to lament the past, but instead to affirm European nations must learn from this experience, and rapidly speed up their collective push to going green. Doing so is not just a matter of sustainability - important though that is - but also national security.
Given this crisis is ongoing, the impact of it in the coming days, months, and ultimately, years - as indeed, it’s expected it will be years given the substantial sanctions that’ve been placed on the Russian government - is yet to be totally clear. Nonetheless, a number of consequences of this conflict are already very visible locally.
The most immediate impact will be at the gas station. Unfortunately, prices of more than $2 a litre have already been seen. This is owing to the fact the invasion has resulted in an increase in the price of oil per barrel, with it ultimately cresting north of US$100 a barrel following the initial attacks in Ukraine - a price point not seen since the last Russian assault on Ukraine during 2014. It’s true this conflict is certainly not the sole cause of rising prices at the pump - so it’s highly unfortunate some in Australia’s political class have recently tried to use this conflict as an ‘escape clause’, instead of taking meaningful steps to address rising cost of living issues - but it’s certainly a contributor.
Another area where this crisis is set to deliver a crunch locally is surrounding superannuation funds. Not only is global conflict bad for business - and thus profits - generally, but there’s also a widespread sell-off of Russian assets held by super funds underway. While few would dispute this is the right thing to do from an ethical perspective, from a financial one it’s anticipated many of these assets could be sold at a loss, and as a result will represent a hit to the bottom line of super funds this year.
Some pain at the fuel pump and in super funds of course pales in comparison to the suffering being experienced by all those caught up in the Ukrainian crisis at the moment. Nonetheless, for many Aussie households that have been stretched by the pandemic, a sharp rise in the cost of living, and/or a plunge in the value of their retirement funds surely isn’t a pleasant experience either, even though it’s of course a much lesser degree of suffering. It’s fortunate then that ultimately there’s the expectation in the time ahead that the cost of fuel will come down once more, and in turn super funds will overall make a solid recovery, just as everyone in Australia is surely anxious to see peace prevail in Ukraine soon.
For people here in Australia that are anguished about the impact of this crisis on Ukraine, a number of responses that can be pursued. At an individual level, writing to your federal leaders and letting them know you want the Australian government to show stronger support for Ukraine is one step. Additionally, there are a number of not-for-profit organisations which can be donated to (though it’s important to do research before donating, as unfortunately some scams have arisen during this time). Finally, for those concerned about the impact of the energy crisis already visible in the global markets, acquiring something like a rooftop solar system, a Tesla battery - or both - can be a tiny but terrific step in helping us all build a new world where the old and horrific conflicts over natural resources are easily identified for what they are, and swiftly resisted whenever a government is tempted to pursue a conflict with another nation on the basis of them.
Nobody is under any illusion we’re ever going to have a totally perfect planet, but if enough regular people show in their words and actions that they will support positive change, and wont support baseless hostilities, we can indeed help build a future where horrible scenes such as those we’re seeing in Ukraine right now don’t continue. Just as all of us here at STC are keeping the victims of the Ukrainian conflict in our thoughts and prayers, we also urge anyone who is horrified by this crisis to join us in taking some action in the ways we’ve outlined above, to help end this crisis, and prevent a repeat of any like it in future.