Shock waves

Feb 25, 2022 View in browser   By Debra Kahn THE BIG IDEA The attack on Ukraine has sparked a battle over the world's reliance on Russia's energy resources. | (Vadim Ghirda/AP Photo) MASTER MINED — Well, he did it. Vladimir Putin's invasion of Ukraine yesterday unleashed a flood of sanctions on Russian interests — and fears of cascading effects on all sectors of the economy. The conflict plucks at a tangled web of concerns: Energy prices, food supplies, cybersecurity, attacks on nuclear facilities. Environmentalists are hoping to avoid getting sucked back into an "energy independence" framing despite Russia's leverage over Europe's gas supplies. "Continued dependence on fossil fuels is the greatest single gift we could give to Vladimir Putin — it's the gift that keeps on giving," 350.org founder Bill McKibben told E&E News' Jael Holzman. "Overcoming that dependence would free us to confront him much more directly." An immediate complication to that idea is Russia's role as a leading producer of copper, nickel, platinum group metals and other minerals considered crucial for building a lower-carbon future. The price of nickel — a key component of lithium-ion batteries — is currently at an 11-year high. One of the world's biggest nickel producers is Moscow-based Norilsk Nickel, or Nornickel. It has a deal with German battery maker BASF to develop a refinery and battery manufacturing complex in Finland. It also happens to be the world's largest producer of palladium, which is used for internal-combustion engines. Preventing U.S. companies from doing business with Russian nickel producers could hurt the clean-energy push. "Does taking Russian nickel off-market via sanctions just tighten that nickel supply chain, where you end up just actually hurting your own domestic manufacturing goals that need significant amounts of nickel?" asked Reed Blakemore, deputy director at the Atlantic Council Global Energy Center. President Joe Biden is already tailoring sanctions to avoid Russia's energy sector, out of concern for global energy markets, as POLITICO's Alexander Ward, Betsy Woodruff Swan and Ben Lefebvre report. Nornickel's executives have suggested they may be sanction-proof. "If there is any kind of war, any kind of sanctions, it will not benefit anyone in the world," Nornickel President Vladimir Potanin said in 2019. "We do something people need us to do, and we will continue." McKibben pointed out that Axis control of rubber-making supplies during World War II prompted the development of synthetic rubber. "Think a little more broadly, instead of giving in to servile defeatism," he said. Read more from Jael here. AROUND THE NATION GAS TAX OPTICS — Politicians' sudden appetite to lower gas taxes hasn't found broad traction, even now that gas prices are expected to rise further as Russia retaliates against sanctions by keeping crude oil off the market. But it's worth considering: Would rolling back gas taxes around the country boost demand for fossil fuels and hurt the climate? Not really, economists say — but it doesn't look great coming from Democrats, who are the ones leading the charge to lower prices at the same time they're trying to get people out of their gas guzzlers. Fellow Democrats are pushing back against the proposals in Congress and in some of the six states that are considering gas-tax holidays, but not because of the optics of lowering gas prices. Rather, it's about the hit that transportation funding would take, and the political capital expended in past tax hikes. To the extent the climate question has come up, Democrats supporting the idea are arguing that it's a short-term fix and doesn't harm their longer-term decarbonization agenda. "I don't think it makes sense to tie short-term responses to inflation and short-term economic issues to long-term climate issues," Sen. Martin Heinrich (D-N.M.) told our Josh Siegel last week. There's a large body of research showing gasoline demand is relatively inelastic and would only increase a tiny bit if prices go down. Indeed, a report that California Gov. Gavin Newsom commissioned to explore why the state's gas prices were so high in 2019 found that drivers were simply not differentiating between cheaper and more expensive gas stations. That the gas-tax debate is taking place one step removed from any consideration of driving habits or vehicle decisions underscores the problem, economists say. "The big problem in the United States is that driving is too cheap," said Lucas Davis, a University of California, Berkeley economist who studies energy pricing. "We have a tiny gasoline tax that is too small to reflect the negative externalities from driving." AROUND THE WORLD Russia's seizure of the Chernobyl nuclear plant has raised "grave concerns." | (Brendan Hoffman/Getty Images) NUCLEAR FEARS — Ukraine's large fleet of nuclear power plants has sparked worries they could be targets of the Russian war, E&E News' Hannah Northey and Peter Behr report. Ukraine has the second-largest nuclear fleet in Europe, after France. After Russian soldiers seized the Chernobyl plant Thursday, International Atomic Energy Agency Director General Rafael Mariano Grossi said he was following the unfolding situation with "grave concern" and called for "maximum restraint" to avoid any action that would put the nation's 15 reactors at risk. After the invasion, Ukraine officials informed the IAEA that there had been no casualties nor destruction at the plant, the IAEA said in a statement. Chernobyl is enclosed by a massive, $1.9 billion steel structure to contain still-dangerous levels of fuel and radioactive debris.   BECOME A GLOBAL INSIDER:  The world is more connected than ever. It has never been more essential to identify, unpack and analyze important news, trends and decisions shaping our future — and we've got you covered! Every Monday, Wednesday and Friday, Global Insider author Ryan Heath navigates the global news maze and connects you to power players and events changing our world. Don't miss out on this influential global community. Subscribe now.     LOOK AHEAD Events are listed in Eastern Time Feb. 28 — West Virginia v. EPA — The U.S. Supreme Court will hear arguments in a package of cases about the Environmental Protection Agency's authority under the Clean Air Act. 10 a.m. Feb. 28 — The EPA starts its virtual workshop to solicit information on the current scientific understanding of greenhouse gas modeling of land-based biofuels used in the transportation sector. 12 p.m. March 1 — The United States Energy Association holds a webinar on microgrids. 11 a.m. March 1 — The Nuclear Waste Technical Review Board holds a meeting to review information on the U.S. Department of Energy's activities related to spent nuclear fuel and high-level radioactive waste. 12 p.m. March 1 — The Woodwell Climate Research Center holds a virtual discussion on incorporating climate risk into decision-making. 1 p.m. March 1 — President Joe Biden will deliver his State of the Union to a joint session of Congress. March 2 — The Credit Union National Association will kick off its 2022 Governmental Affairs Conference. 9 a.m. March 2 — The EPA will hear from stakeholders regarding environmental justice considerations related to the development of PFAS drinking water regulations. 1 p.m. March 3 — ConservAmerica holds a webinar on the Department of Energy's Loan Program Office. 11 a.m. YOU TELL US GAME ON: Welcome to the Long Game, where we're delivering the latest on efforts to shape our future. Tuesday through Friday, we'll have data-driven storytelling, compelling interviews with industry and political leaders, and more news to keep you in the loop on sustainability. Our team is sustainability editor Greg Mott, deputy editor Debra Kahn, reporters Lorraine Woellert and Catherine Boudreau and digital producer Jordan Wolman. Reach them at gmott@politico.com, dkahn@politico.com , lwoellert@politico.com, cboudreau@politico.com and jwolman@politico.com. Thanks to Josh Siegel, Tanya Snyder and E&E News' Jael Holzman, Hannah Northey and Peter Behr for contributing today. Want more? Sign up for the Long Game. Four days a week and still totally free!   DON'T MISS CONGRESS MINUTES: Need to follow the action on Capitol Hill blow-by-blow? Check out Minutes, POLITICO's new platform that delivers the latest exclusives, twists and much more in real time. Get it on your desktop or download the POLITICO mobile app for iOS or Android. CHECK OUT CONGRESS MINUTES HERE.       Follow us on Twitter Catherine Boudreau @ceboudreau Debra Kahn @debra_kahn Greg Mott @gwmott Lorraine Woellert @Woellert Jordan Wolman @jordanwolman   Follow us

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