NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Sky-high oil prices resulting from a potential Russian oil import ban could force governments to pour more cash into fossil fuel subsidies to shield consumers from rising energy bills, rather than use the money to fight climate change.

Even before Russia’s invasion of Ukraine, rising energy costs had triggered a wave of subsidies despite countries agreeing to rein them in at the COP26 climate conference in November.

“The last thing that governments want to do is increase any subsidies for fossil fuel use but they have to be sensitive to the price shock,” said Ben Cahill, a senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS).

“It’s an economic problem we have to deal with today.”