Carbon emissions and economic impact of EU’s embargoing Russian fossil fuels

Abstract The war in Ukraine lays bar EU’s dependence of fossil fuel imports from Russia. Here, we use a global computable equilibrium model, C3IAM/GEEPA, to estimate CO2 emission and 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% for the EU, and about 5% 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, while turning GDP losses into gains. Implementing a partial embargo with tariffs largely compensates for lost government revenue.