The raw numbers suggest that an energy divorce between Russia and the EU may be manageable to engineer. In practical terms, however, several complications arise. For example, switching from Russian piped gas to liquified natural gas (LNG) requires additional infrastructure. Electricity generation capacity cannot necessarily simply switch from one source of primary energy to another.

Furthermore, the LNG market is a contact market rather than a spot market. While non-Russian sources of piped gas could fill part of the void left by Russia, the EU will have to engage in contracting long term supplies of LNG from the Middle East and elsewhere to make up the gas shortfall.

In addition, given the EU’s significant import dependency, the expansion of renewables capacity will take years. The prospects at the global level are more feasible, Renewable energy account for about 30% of energy capacity and is charting 10% growth per annum.[vii] Hence, given the relatively small size of EU-Russia energy trade as part of global consumption, an acceleration of investment could have immediate effect.

Finding alternative buyers for Russia’s energy exports is also not simple. That said, the oil market is liquid and, although not perfectly fungible, Russian oil will likely find a home somewhere in whatever quantities Russia chooses to produce. The issue is the price. Given the sanctions and embargos, Russian oil is currently trading at a 25% discount compared to market prices.[viii]

Advantage: China

Russia is likely to look east to the energy-hungry economies of Asia, and China in particular. There are two important observations here. First, it is not in China’s interests to become dependent on Russian energy. Second, China is likely to maintain a diversified basket of suppliers in order not to face the same quandary as the EU.