Environmental consequences of geopolitical crises: The case of economic sanctions and emissions

Abstract

Geopolitical crises, and economic sanctions, in particular, have created considerable disturbance in natural resource markets. This study focuses on a significant consequence of this disturbance, namely how sanctions may derail targeted states from their low-carbon pathways. Increasing capital costs and difficulties in accessing technology force sanctioned states to move away from capital- and technology-intensive greener alternatives to employ more carbon-intensive (predominantly coal) generation modes in their primary energy supply. We also show that the recovery process from sanctions further increases coal use in these targeted states. Our econometric results from a global cross-sectional time-series dataset support our expectations. Our findings call for a deeper understanding of the challenges in achieving sustainable recovery in the aftermath of geopolitical crises. These results call for assessing carbon-footprint implications of specific foreign policy actions before these actions are carried out.