Carbon emissions and economic impacts of an EU embargo on Russian fossil fuels

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 slight 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). Implementing a partial embargo with tariffs largely compensates for lost government revenue. An EU embargo on Russian fossil fuels would lead to a rapid decrease in fossil fuel combustion, GHG emissions reductions and potential economic losses. This analysis quantifies such effects, while also demonstrating how demand-side responses could offset the negative shock.