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Posted on Apr 26th, 2022

What Russia’s Invasion of Ukraine Means for Climate Change


Jeremy Lin, CFA

Portfolio Manager

The Russia-Ukraine crisis has proven to be somewhat of a watershed moment for energy. After sanctioning Russia, many European countries are now forced to grapple with the reality that they are too dependent on Russia’s oil and natural gas.

The European Union imports 25% of its oil1 and 40%2 of its natural gas from Russia. And as we’ve seen so far, it’s clear that Putin is happy to exploit this dependence for political concessions – he’s even gone so far as saying he’ll accept bitcoin for gas from "friendly" countries (but that’s a whole other blog post…).

So, this situation gives EU leaders a couple options:

  • They can push towards energy security seemingly at the cost of a renewable transition, or
  • They can speed up their transition to renewables

Of course, these two paths are not mutually exclusive. A stronger push towards renewable energy might not necessarily affect an energy security strategy that includes natural gas or nuclear power. But for now, let’s look towards a greener future.


The situation the European Union finds itself in today is not unlike the oil crisis of 1973, a time of high government spending and rising wages that culminated with OPEC embargoing the United States from its oil exports, sending gas prices straight up.3

But as the saying goes, necessity is the mother of invention. During the oil and energy crises of the 1970s, national governments were forced to implement measures to reduce consumption and drastically shift the behaviours of their people.

Research into renewable energy also increased.4

A similar response is happening today within the European Union. Russia’s invasion of Ukraine has triggered an accelerated drive towards a green energy transition, lowering – and ultimately eliminating – the EU’s dependence on Russian oil and gas.

The Unfortunate Truth

It’s heartless to look at any upside as a direct response to the horrific situation in Ukraine and all the senseless deaths, but the truth is this war will catapult renewable energy transition and put the EU back on track to meet its carbon emission targets.

“We need to act now to mitigate the impact of rising energy prices…and accelerate the clean energy transition,” said Ursula von der Leyen, President of the European Commission. “The quicker we switch to renewables and hydrogen, combined with more energy efficiency, the quicker we will be truly independent and master our energy system.”5

Enter REPowerEU

REPOWEREU to cut our dependence on Russian gas

In early March, the European Union announced a new energy initiative, REPowerEU. This initiative aims to significantly cut down the EU’s dependence on Russian gas by 2/3 this year and completely eliminate any reliance within the decade.6 It seeks to diversify supplies, speed up renewable gases, and replace natural gas in heating and power generation.

REPowerEU will also fast-track the deployment of solar energy and renewable hydrogen. But not everything in it is directed at EU nations. REPowerEU also asks the people of the European Union to lower their thermostats by 1°C – a move that will eliminate about seven percent of Europe’s gas consumption.6

“And it’s time we tackle our own vulnerabilities,” tweeted Frans Timmermans, Vice-President of the European Commission. “The faster we move, the sooner we reduce dependency on others, the stronger we stand together.”7

REPowerEU in Action

The measures in the REPowerEU plan will reduce the use of fossil fuels at a much faster rate than what was in place. Bolstering energy efficiency, increasing renewables, and addressing infrastructure bottlenecks, will remove at least 155 billion cubic metres (bcm) of fossil gas – roughly the volume imported from Russia in 2021. Almost 2/3 of that reduction is achievable this year, ending the overdependence on a single supplier.8

“Renewables are home-grown, they create jobs, here in Europe,” said President von der Leyen at an informal meeting of the Heads of State. “They are a strategic investment in our society and in our independence.”9

REPowerEU aims too nearly triple current renewable capacity in the next 8 years

Two Paths Merging

Experts are warning of significant challenges. Rapidly accelerating the transition to green energy and moving away from Russian natural gas is a tall order. Europe still relies heavily on Russia for its gas needs, mainly for heating. European leaders were counting on natural gas as a cornerstone of Europe’s clean energy transition. A temporary energy bridge of lower-carbon energy as they move from carbon-heavy fossil fuels to green renewables.

Take Germany, for example. As they moved away from nuclear, Germany became Russia’s biggest customer of natural gas. To eliminate this dependence, Germany is building the country’s first two liquefied natural gas (LNG) import terminals. These terminals – and any new LNG terminal – must be hydrogen ready. “An LNG terminal that receives gas today can also receive green hydrogen tomorrow,” said German Chancellor Olaf Scholz.10

Capitalizing on the Energy Bridge

Last year, we launched the Purpose energy Transition Opportunities Fund (CLMT) because we believe the path to that greener future is one with low-carbon transition fuels. The long-term decarbonization needs have not changed, but we understand there needs to be a bridge as the world transitions to this greener future.

CLMT takes a fundamental approach to selecting global equities from a broad swath that includes natural resources, electricity generation, and the supply chains of geopolitically stable regions. Investing in both renewables and low-carbon fossil fuels serves the energy needs of today while providing the sustainability required for the future.

Because looking towards a greener future also requires looking at today’s reality.

1. “REPowerEU: Joint European action for more affordable, secure and sustainable energy,” European Commission:
2. “Factbox: What are Europe’s options in case of Russian gas disruption?,” Reuters:
3. “1970s energy crisis,” Wikipedia:
4. “From oil crisis to energy revolution – how nations once before planned to kick the oil habit,” Rapid Transition Alliance:
5. “REPowerEU: Joint European action for more affordable, secure and sustainable energy,” European Commission:
6. “REPowerEU: Joint European action for more affordable, secure and sustainable energy,” European Commission:
7. Timmermans, F. (@TimmermansEU) [Twitter] 25 February 2022:
8. REPowerEU: Joint European action for more affordable, secure and sustainable energy,” European Commission:
9. “Opening remarks by the President: Informal meeting of HoSG,” European Commission:
10.  “Germany will build two LNG import terminals – chancellor Scholz,” Clean Energy Wire:

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