Europe’s ambitious plans to replace fossil fuels with renewables are expected to have substantial long-term effects on the Russian economy and its ties with the EU, analysts said. Under the EU’s Green Deal, member states agreed to cut greenhouse gas emissions by at least 50% by 2030 from 1990 levels before achieving carbon neutrality in 2050.
The International Energy Agency reported that renewables contributed to just 18% of the EU’s gross final energy consumption in 2018. This indicated that fossil fuels still dominated the majority of energy demand from the EU. Crude oil accounted for the largest share of 34.8%, followed by natural gas (23.8%) and coal (13.6%). The Green Deal will significantly shake up the composition of the region’s energy mix.
The move is expected to hurt Russia’s exports of coal, crude oil, and gas to Europe, depending on how fast the transition will be. Anatoly Chubais, the former Russian deputy prime minister, said the country should cut reliance on oil and gas revenues which currently account for one-third of its budget. Chubais said Europe’s energy transition could cause a 10% loss in Russia’s GDP.
