Abstract
The Russia–Ukraine conflict lays bare the dependence of the European Union (EU) on fossil fuel imports from Russia. Here, we use a global computable general equilibrium model, C3IAM/GEEPA, to estimate CO2 emission and gross domestic product (GDP) impact of embargoing fossil fuels from Russia. We find that embargoes induce more than 10% reduction of CO2 emissions in the EU and over 5% increases of emissions in Russia, while both regions experience GDP losses (around 2% (US $486 billion) for the EU and about 5% (US $149 billion) for Russia, ignoring the relative impact of other sanctions). Reacting to increasing energy prices with demand-side response inside the EU would increase CO2 emission savings, and ease GDP losses; however, the world would continue to suffer economic damage (US $655 billion).
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Data availability
The data that support the plots within this paper and other findings of this study are available from the corresponding authors upon reasonable request.
Code availability
The codes that support the methods of this study are available from the corresponding authors upon reasonable request.
Change history
21 April 2023
Since publication of this article, sections of main text have been slightly modified to clarify intended meaning and to frame economic effects in US dollar terms.
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Acknowledgements
We gratefully acknowledge the financial support of the National Natural Science Foundation of China (grant nos. 72074022, 72104022, 72293600 and 72204234). We thank our colleagues for their support and acknowledge help from CEEP-BIT.
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Q.-M.L., F.C. and Y.-M.W. conceptualized the paper. L.-J.L., H.-D.J., J.Q. and Q.-R.C. acquired the data. L.-J.L., H.-D.J. and Q.-M.L. carried out the model. L.-J.L., H.-D.J., Q.-M.L., F.C., H.L., Y.-F.Y., Z.-Y.R., O.E. and Y.-M.W. contributed to the interpretation of the results. L.-J.L., H.-D.J., Q.-M.L., F.C. and X.Y.Q. implemented the data presentation and visualization. L.-J.L., H.-D.J., Q.-M.L. and F.C. contributed to the Supplementary Information. L.-J.L., H.-D.J., Q.-M.L., F.C. and Y.-M.W. wrote and reviewed the main manuscript.
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Nature Climate Change thanks Thomas Longden, Giacomo Marangoni and Ashwin Rode for their contribution to the peer review of this work.
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Extended data
Extended Data Fig. 1 The framework of C3IAM/GEEPA.
C3IAM/GEEPA is a multiregional recursive dynamic computable general equilibrium (CGE) model, which is composed of production, income/expenditure, investment and foreign trade. When producing one commodity, labour, capital, energy and other intermediate products are all inputs in each sector, which are assumed to follow a nested constant elasticity of substitute (CES) function. Household income mainly comes from labour income and capital returns; Government income is composed of tariff, indirect tax, household income tax and transfers from other countries/regions. C3IAM/GEEPA adopts Armington assumption, assuming there is imperfect substitutability between imports and domestic output sold domestically. The commodity that supplied domestically is composed of domestic and imported commodities following a CES function. A constant elasticity transformation (CET) function is used to allocate total domestic output between exports and domestic sales. The commodity, capital, and labour markets are cleared in C3IAM/GEEPA. The model adopts the recursive dynamic mechanism and is pushed forward through capital accumulation, population growth, and improvement of total factor productivity.
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Supplementary Information
Supplementary Results (1 and 2), uncertainty analysis (3 and 4) and model introduction (5 and 6).
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Liu, LJ., Jiang, HD., Liang, QM. et al. Carbon emissions and economic impacts of an EU embargo on Russian fossil fuels. Nat. Clim. Chang. 13, 290–296 (2023). https://doi.org/10.1038/s41558-023-01606-7
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DOI: https://doi.org/10.1038/s41558-023-01606-7
