Andrey Melnichenko, Russia’s fertilizer tycoon, slams Western sanctions as class warfare—seizing $6B+ in assets without due process—while warning Ukraine’s war risks nuclear escalation after 20 years of NATO expansion. He dismisses climate alarmism, arguing 50% of emissions could be cut via reforestation and albedo tweaks (e.g., white roofs), not fossil fuel bans, and accuses the West of weaponizing climate policy for energy dominance. With China’s rise and dollar decline reshaping geopolitics, he predicts instability will peak as superpowers treat Ukraine as a proxy battleground, while Putin’s fall could destabilize Russia’s centralized economy. The "most dangerous time ahead" hinges on whether leaders prioritize pragmatism over ideological wars. [Automatically generated summary]
The U.S. government is now orchestrating a bombing campaign within Russia.
I mean, the United States is in a hot war with Russia because the president was just convicted, former President Trump, but there's a lot going on in the U.S. They're both nuclear-owned powers.
What are the chances that this becomes a nuclear exchange?
So you are described in the US press as an oligarch.
Oligarchs, at least in my understanding, were people who, as the Soviet Union collapsed in 1991, grabbed state industries because they had inside connections and they killed people.
But I think you were a teenager when the Soviet Union collapsed, correct?
I was studying in the school, which is part of the Moscow University.
Yes, then I was studying in the Moscow Physics Faculty of the Moscow University.
That was a moment when the Soviet Union collapsed.
I did not have any connection, I was in the new city for me.
So what I did, I started to organize different businesses at this age.
So, most interesting, it was a bank.
I received a banking license when I was 21 years old.
A little bit later...
This bank grew, become one of the biggest banks in Russia, biggest private banks in Russia, and I sold it in 2017. And then you went into the fertilizer business?
During the 90s, my bank did not participate in anything that you're referring to.
So we did not participate in privatization, we did not grab basically government assets, so we grew up like a market institution.
So that was only what I did during the 90s.
In the beginning of 2000s, I started to be interested in industrial businesses also.
But again, we did not participate in privatization.
We bought it mostly from the secondary market, from people who bought it during the middle 90s.
So why I did not participate in privatization?
Very simple.
I was 23, 24 years old.
I did not have resources and this opportunity passed.
The U.S. government is seizing Russian assets, and we imagine these are state assets.
I'm opposed to it anyway, because I think it's bad for the United States, but the story that we are told is that these are Russian assets, but your assets are not Russian assets, they're your assets.
Okay, so what happened with me in 2022, certain Western countries start to impose sanctions on me.
What does it mean?
What sanction means in general?
Sanction means that your assets are, so to say, basically arrested, and like a result, there is also a risk of confiscation.
After that, any businesses or any companies to which you are connected, if they have an operation on the West, this operation basically cannot be performed going further.
So you cannot do business in the Western countries which apply sanction.
And third, I'm banned from visiting Western countries.
That's what sanction means.
Answering your questions.
There are different types of sanctions.
There are economic sanctions.
So usually the sanctions are applicable either towards some states, like, for example, against government or against state, central banks or whatever.
Exist sanctions which are targeted to the economic sector.
For example, oil or gas industry, or I don't know, some in other sectors which bring to certain government revenue.
After that, there are sanctions which are targeting companies.
So all of these sanctions have a meaning, a purpose to Basically, weaken the economy-based of your adversary.
That is a little bit understandable.
There are, after that, personal sanctions.
It's slightly different.
Usually, this sanctions targeting individuals, people.
So, for example, they will target politicians or government officials or people who do certain kinds of promoting violence, etc.
So, that's understandable.
So, the purpose of this sanction is that people change their behavior.
They stop to do what they are doing.
So, that is the purpose of this sanction.
There exists a third type of sanction.
These sanctions are applicable not because you did something bad.
They're applicable because of who you are.
So that's how it works.
They're applicable to a certain class of the people.
In my case, I was sanctioned not because I did something bad.
In the United States, it's the Fifth Amendment to the American Constitution.
And basically, the question is about if the rights and privileges of the Fifth Amendment to the United States Constitution are applicable to me or not, or to other people.
Normally, in the United States, it will be unusual that people can basically not allow access to the new process because they belong to a certain class, be it race, be it wealth, be it something else.
But in our case, the situation is exactly like this.
So you are not, as you said, in financial services anymore and haven't owned a bank since 2007, long before any of this began, seven years before 2014. But you do own one of the world's biggest fertilizer companies.
But you, I mean, it's one thing to shut down a global arms dealer, but to try and punish a global fertilizer dealer when fertilizer provides food that people need to live, that does seem, maybe that's not the person you want to sanction.
The system was not ready for this type of actions.
Actually, if I may return a step before about the fertilizer, what really happened?
Mostly it was the European problem.
Because the European Union used, like I said, the fact that somebody is a leading business person, a wealthy businessman, like a criteria for sanction.
In order to say this, they need to explain what exactly your wealth is.
In the case of mine, And in the case of some other owners of a fertiliser company, it's become connected.
Basically, my Wells is a fertiliser company.
It means I'm connected with the fertiliser.
So that's a justification to put me in the category of the leading business person.
But at the same time, how interesting it works.
So if I'm connected with whatever company, operation of this company must be blocked in the European system in this way.
So Russia and Belarus totally supply about 20-22% of the fertiliser to the world market.
So, the situation which happened to me happened with other owners of Russian fertilizer companies.
What was the result of it?
The result was predictable.
In 2022, during about 11-12 months after sanctions were applied, supply on the world market was dropped on about 18 million tons.
It's a huge number.
So, that was the only reason for the drop of the supply was a personal sanction.
So when 20% of the world market disappeared, actually not 20% disappeared, because only supply which went through Europe, meaning through the European ports or other means where Europe had control, this part of supply disappeared from the world market.
What happened like a result?
Prices of the fertilizer shut up, so about three times during 2022. So it's, let's say, from average $300, we start to experience prices about $900.
What happened like result?
Basically, demand dropped.
So farmers did not have money to buy fertilizers.
But what kind of farmers were?
It was disproportionately farmers from the poor countries.
Because in the rich countries, governments will help to the farmers.
They will give subsidies or something else.
Also, consumers are ready to pay more for production produced by these farmers.
But that is not the case in the poor countries.
Governments don't have means to help farmers and otherwise consumers are not ready to pay because they don't have enough income, enough possibility to do it.
So mostly the disproportional effect of the sanction was felt on the poor countries of Africa, some countries of Latin America, some countries of Asia.
So that's where the supply of fertilizer dropped.
Now think about it.
So these countries are poor.
They mostly are not able to substitute domestic production of agrofoods by import.
Why?
Because it's much more expensive.
So it's much cheaper to import fertilizer and grow products domestically rather than import grains or other products.
So if you don't have money to pay for fertilizers, you definitely would not have money to pay for the end product, for the grain or for something else.
So what's happening?
If farmers did not buy fertilizers...
It means domestic production of agriculture, products fell down.
Like result, what happened?
Domestic prices went up.
What means when domestic prices of agriculture products go up?
Supply meets demands.
In this case, it's very simple.
What means supply meets demands?
Supply is less, demand becoming also less.
What it means?
It means before people eat three times a day, and some of them starting to eat two times a day.
That's what means demands in terms of the food.
We have numbers and we have researchers which show effect of this action on certain countries, country by country.
Do you think that the lawmakers in the United States who impose sanctions and endorse them, which is almost all of them, very few American lawmakers oppose sanctions.
I would not remember exact number, but I think it will be pretty Correct to say that in 2019, European GDP was something about $15 trillion.
And the United States GDP at that time was about $15.4 or something like this, slightly bigger.
So what is today's GDP of the United States?
If I'm not mistaken, it's something about $25 trillion.
In the Europeans, it's about $16.5.
So it was not much growth during this period of time.
Of course, no company which built their business on access to the cheaper energy would consider putting new investment or continue operation in Europe, because now European prices for energy is much higher in the United States.
Of course, because European prices today, it's a derivative of the price of LNG, liquefied natural gas.
So if American consumers, industrial consumers pay Henry Hub, domestic price of the United States, for example, then European consumers need to pay Plus, plus, plus, a lot of logistic costs for the same products to be delivered in Europe.
So it's a big difference compared with the situation it used to be before the war.
I mean, the idea of the United States was once we imposed these sanctions and funded Ukraine, the Ukrainian military, that it would destroy the Russian economy.
We have a good team of technocrats working in the government, working in the central bank, and still now, biggest part of the Russian economy, basically, it's a market-based economy.
So companies, under the scenario of the stress, are trying to find their way to survive, and it looks like doing this more or less successfully.
So, of course, it was a moment of the dramatic change.
Something was happening maybe once or twice during normal person life.
So, it was changed from the...
A system where suddenly people receive a lot of freedom, but did not receive a lot of responsibilities.
So that is what happened at this time.
So when you receive a lot of freedom, but don't receive responsibility, then society is not ready to be responsible for what it does.
So it leads to chaos.
And that is exactly what started to happen.
So at this moment of time, many people who felt comfortable with the previous system were disoriented.
It was pretty difficult for them to cope with a new situation.
At the same time, completely for this reason, it was a good ground for the people who were not basically connected with the previous way of life, for young people, for people who in the simple way had nothing to lose at this moment of time.
So that's a moment when entrepreneurial energy or ability to do something allow you to do what's impossible to do in other periods of time.
And I'm very grateful that I was able to live through this period of time.
I mean, if you take sanction and economic part, actually, what I don't like, I don't like when I hear from a certain politician when they say it's great for American economy.
You need to look at history not so long, but at least for the 20 years back.
So, in reality, cooperation between Russian government and Western governments deteriorated during the last maybe 20 years.
So that was a process.
See how it developed.
It developed with the increase of NATO presence closer to the Russian borders.
It was many other things which basically contributed to this deterioration of relations.
And I would not say it was like from one side or from another side.
It was a number of the things which basically brought us where it's brought it.
It's become more and more and more difficult during the last 15 years.
What is really...
From my understanding, all of these events in Ukraine are just moving of the conflict on the next level of escalation.
That's what it is.
So that was 2014. So what is the reality?
It's events of 2022. It's again, it's a movement of the story which was in the process, maybe 15, 20 years of basically unresolved situation of security in Europe to the next level of escalation.
So basically, it's one process.
Ukraine, for my understanding, it wasn't like an issue by itself.
It's a process of non-understanding, of not ability to communicate, to find the common solution between West, United States first of all, and Russia, which led step by step to step to the new and new levels of the escalation.
That was a process.
And what happened during this process?
Parties lost trust to each other.
So Russian government, Russian leadership lost trust in the Western system, inability to find solutions with the Western leaders.
Same happened from the Western side.
So Western leaders lost trust, inability to make, to find understanding and to resolve complex issue with Russian leadership.
So that is what happened.
So when it happened, that's probably answering your question why.
So dynamic, it means that because basic issues, basic problems are not resolved or even not articulated sometimes, more and more and more different means of confrontation coming into the play.
For my understanding, basically, what's happening in Ukraine, it was one more step towards this escalation.
But then again, it can be another step and can be another step.
So, unfortunately, we are moving towards this direction, for my opinion, right now.
I would say in a very dangerous moment, in the moment which perhaps we did not experience for last, I would say, from 1984, something like this, for the last 40 years.
I mean, the U.S. government is now basically orchestrating a bombing campaign within Russia.
I mean, the United States is in a hot war with Russia.
And this is because the president was just convicted, former President Trump, but there's a lot going on in the U.S. I don't think that most Americans fully understand we're in a hot war with Russia.
So, I mean, they're both nuclear-run powers.
What are the chances that this becomes a nuclear exchange?
So for now, I don't see forces which are seriously working to de-escalation.
Because it's not defined yet what victory means.
It's not defined with what purpose of each conflicting party really is.
In reality, it's described, but today these goals are not really discussed.
It's like one party moving one direction.
What, for example, the Ukrainian Party is saying?
The Ukrainian Party of this conflict is saying, okay, we want something like to go back to the situation when everything was in 2014. Okay, so they want to do de-escalation in two steps compared to the today's situation.
Step not 2022, but step 2014. At the same time, from the Russian perspective we are hearing when we are listening to news or whatever, Russia is saying, no, we want something bigger.
We wanted to do de-escalation even further.
We wanted to come back to a situation when security arrangements in Europe are done in such a way that Russia does not feel endangered from different sides.
So that's what Russia's leadership is referring.
So why do we do one step of de-escalation?
We need to do two-step de-escalation.
So that is like two completely different languages.
So you cannot discuss one part, one type of basic problem, and don't discuss another.
So when two parties don't hear each other and each of them kind of living in their own world with their own limitation, what you should predict?
You should predict that more people will die, that escalation will continue, and God forgive us, but the next threshold of escalation can be crossed.
But once again, even from Russia's side, I can understand basically dynamic.
But what I don't understand, I don't understand why West is not worrying about.
What today's situation reminds me very much of the situation which was in the autumn 2021. So what we saw in the autumn 2021, we saw military maneuvers near the Ukrainian border.
We saw the proposal to come back and to discuss Different types of arrangements, which can make the situation a little bit more secure.
Not a little bit more, but more secure, more predictable.
When security is basically working on both sides, not only against Russia, but also such and such arrangements where Russia feels secure.
That was a major discussion somewhere in the autumn 2021. So Russia came with a certain proposal.
It was a lot of discussion.
What was the result?
The result was actually noise.
The result was okay.
It will not happen.
The result was, okay, just try to do it, and we'll do something more terrible to you.
That was kind of the discussion at this moment of time.
What Russia did at this time, move the situation to the next level of escalation, on the, basically, situation in the beginning of the special military operation.
That's what Russia did.
So that happened once.
So compare with the situation today, military maneuvers, with a tactical nuclear weapon at this time.
A lot of basically comments like, oh, don't take it seriously.
Mr. Putin did not use bomb for two years.
For sure, he will never use it anymore in the future.
All of this kind of the discussion.
We need to ignore it because if basically Russia will do it, we will do it something even more terrible.
What did it remind you?
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For me, it's remind to 21 and beginning of 22. But Putin did roll across the border in the end.
Sure, I mean, of course I understand that, and their prestige is at stake, and no one wants to admit mistake, and no one wants to be seen as siding with Putin or being a disloyal American or Belgian or, you know, Frenchman or whatever.
the media control people by attacking them.
But you would think that a nuclear exchange would be the moment where people would say, well, I don't care what you call me.
We're not going to have a nuclear war because that would be the end of people.
And I would do anything I could do to stop that, anything, including accept responsibility for dumb statements I made before, be embarrassed or being called names.
I don't care.
I'm going to try and stop nuclear war.
I thought that was the red line for people, but it's not.
In a certain moment, it's allowed to change the course.
So leaders change and then if some leaders follow some particular scenario, it's very difficult for them to change their opinion, to change the position which they took towards the population of their countries.
But when democratic system makes a change, then the course of society may change also.
So I think this problem will pass in one way or another.
The problem is how fast this will pass if some tragedy will not happen before.
So, your read as a non-American who's not allowed in the United States, but I know you follow this carefully, do you think Trump is capable of stopping this trajectory of escalation?
I think today, the world in general have a problem with the leaders who can look not on the polarized way to say that is true or that is true, but people who can look a little bit more globally.
I think we have a deficit of these people right now.
So, and the idea of this constant conflict, of these things with raptured The world, on part, has become very dangerous.
So I think the world needs a moment for a little bit of cool down.
And then, probably, the process will start.
Remember what stopped the war in Vietnam, actually?
President Nixon went to China famously 50 years ago in probably a lot of objectives, but the main objective was to solidify the split between Russia and China because you don't want them to align against you.
Of course, if you're the United States, in one day that seems to have changed.
Is the Russia-China alliance strong?
Is it enduring?
Is it, you know, for the next hundred years will those two countries be in an alliance, do you think?
So since you live outside what we think of as the West, and Japan kind of is part of the West in a way, it has American troops on its soil, how do you see the world changing now that you've been forced outside the old world into the emerging world?
Where are the new, where are the freest places in the world?
Do you think that, and I agree with you completely, I strongly believe in democracy and, of course, rule of law, but I wonder what the lesson the rest of the world is taking from the last couple of years.
I mean, do you think there will be other countries that want to sign on to the democratic project?
It's very difficult to say what the democratic project is, but, I mean, we are going through the period of time when dominance of one superpower of the United States, it will not bear.
It will not be in the future like it was before.
For sure, China has done a great, incredible job.
And we will see at least two superpowers which will, in one way or another, agonize world affairs going forward.
At the same time, we see a number of countries who will become strong regional leaders.
So we're going to a completely different arrangement of the world.
A world which is, you can call it multipolar, but the world which is with a completely different dynamic.
So let's assume that situation which we are talking about, this escalation level will not be crossed.
Let's assume that some miracle will happen, which will bring the world to the de-escalation.
And slowly, slowly, new order will start to emerge.
So how the situation will develop in this scenario?
Hard to say.
There are bad scenarios and good scenarios.
Bad scenarios, it's, again, to come back to the cycle of the Cold War, basically, to come back 40 years ago, where there are a couple of blocks, let's say, United States, one side, China from another side, a couple of countries which are trying to...
I mean, do something independent a little bit.
So something like this.
That's a dangerous world, for my understanding, because it will be just a repetition of something that we've already seen.
So competition, where there are only two polars, a couple steps after, can lead to nothing else but to the very difficult confrontations, very difficult fight for the different resources, for access to this and this.
That's, for my understanding, a situation which...
Not very sustainable, to put it this way.
So if there's another scenario, if there's a scenario where something else may happen, perhaps.
So what it can be?
It means there should be a possibility for some other countries to basically work with both sides, to work with one superpower and for another superpower.
To work, it means to have security arrangements.
To have understanding, to have investment from both sides, to have trade with both sides.
And if such countries, such actors will be, basically, more and more of them will be forming the world, that's, from my understanding, what can make the world more solid, more stable, more sustainable.
So how to make sure that we did not come to competition where either you are with us or you are our enemy, but how to come to the situation when acceptance of the I'm following every
I mean, it seems that way as a total outsider, if you have the biggest country in the world with very complicated demographic mix and a lot of different parts of the country that don't have that much in common with each other.
It seems like with a lot of nuclear weapons, that could be bad for the world.
So when this weapon applies, it's creating stability in the system.
When chaos was applied, let's say, in Afghanistan or in Iraq or in Yugoslavia 30 years ago, how long it took before stability was brought to the same places?
So in a situation like Russia...
Any type of chaos, I don't think, firstly, the system will be destroyed by the chaos.
Because Russian people, Russian society already came through a very different period of time in the 90s, where it was a lot of chaos.
And society received kind of the vaccination against this type of disease.
So as soon as competition is starting to happen like this, that's the worst scenario for any country to be in.
So that is what happened with Ukraine.
Hopefully other countries will look at an example and try to not be there.
That's why I think as a model, it's much more positive.
It's a model when countries are not trying to be one side or another side, not trying to find which house is better, to compete in the competition where they have nothing to gain.
So I think the best way for such countries is to try to find the balance and to be good with everyone.
So it's also true and very possible that the number of dangerous nature anomalies will increase, like the consequence of the warming of the surface of the planet.
Of course, it's a more natural way to start discussion from this, because we're all following a certain type of the thinking, which is, maybe it's coming from really, how you said before, from a religious perspective or whatever, because it's always the same circle.
Firstly, exists a sin.
Somebody done something bad.
Then exists punishment.
Something bad happened because somebody done sin.
Then exists, how you say it in English, you recognize.
That's why if you look on all of it combined, it's really unexplainable.
No, I mean, from the logical perspective, why all attention given not to the changing of the albedo of the surface of our planet, and not to addressing other 94% of the emission, which is coming from the nature, but why all attention concentrated on this 6% of total?
That's very difficult to explain from the logical perspective.
So that's what's beginning.
After that, naturally, question number two can be asked.
Is it possible to address either the remaining 94% of greenhouse gases, or what does it really mean to change albedo of the surface?
Is it feasible?
What does it mean?
Of course, it's feasible.
So, what means to change natural emission, this 94%?
Plant forest, that's about it.
So, meadows, it's about this.
To deal with the permafrost, which is covering big storages of the carbon underneath.
It's also to deal with the CO2, which is trapped there.
So there are different ways to affect natural cost emissions.
That's called natural-based solutions.
There are estimations and numbers which show the potential of it.
It's about 18 gigatons, 20 gigatons, so numbers like this.
About half of the anthropogenic emissions can be much more cheaply mitigated by a natural-based solution.
It's a very good instrument to change albedo of the surface.
It's one of many.
You can paint the surface of the buildings.
You can, I don't know, do certain techniques which allow...
Ice to melt a little bit later, because when it's ice, it's a kind of mirror.
So albedo of the ice is very high, it reflects a lot.
And when ice, for example, melts during summer period of time, what's happening is basically what is underneath ice becoming exposed to the atmosphere.
And that is usually black color.
So albedo is increasing.
So if you can find solutions which allow ice to melt a little bit for the shorter period of time in the Arctic, that's...
In reality, I think if you go back a little bit to the history, how happened that suddenly humanity started to concentrate on this climate change story.
Actually, it started, I would say, End of the 80s.
So it started maybe from the speech of the Prime Minister of England, Margaret Thatcher, which was delivered in 1989 in the United Nations.
So what was the moment at that time?
Basically, it was a moment when the world seems to move away from the previous big danger, from the nuclear war.
So that was a moment of...
It's a kind of reorganization of the world.
And that was exactly the idea of her speech.
So she said that, okay, now when one problem passes, we have the ability to concentrate on another, on dealing with climate change.
It's always good to have something that you're fighting against.
Don't you think so?
Yes.
So that was the beginning of the story.
After that, three years after that, in Rio de Janeiro, a convention was signed.
In the day of the Earth, a convention was signed.
A convention which started to put in place a formal mechanism of combating There are many strategies which can be applied in order to move forward with this task.
But at this moment, a particular strategy was chosen.
A strategy which was concentrating on killing fossil fuels or reducing dependence from the fossil fuels in different industrial processes.
So that was a moment when it happened.
So the question is, why it happened at that time exactly?
In this way.
I think it's happened because at this moment of time, international institutions which were concerned with this issue, United Nations and others, were basically dominated exclusively by the Western influence at this moment of time.
They were basically because it was not other powers in the world at this moment of time.
As some people call it, it was the end of the history moment.
So it was one power and all institutions in one way or another basically moved towards goals more beneficial for this power at this moment of time.
So why Western countries took away combatting climate change through this specific mechanism?
So, the combating of the dependency on the fossil fuels or the dependency of the industrial processes from the fossil fuels.
Very simple, because it was two benefits.
Benefit number one, to reduce dependence of energy imported from the faraway places.
And the second reason was that new technological New technologies which are needed in order to produce energy, not from the fossil fuels, but, let's say, from renewable and other sources, or new industrial processes which need to be developed to do other jobs without using fossil fuels.
Basically, the idea was that countries who will start to do it first will get a technological advantage and will create not only Something good for their own economy, but later we'll be able to provide the same solution to other countries and maintain technological leadership.
So that was a logic.
So why basically directions move towards this?
Think about it.
If you're talking about planting of the trees, it's nice, but where to plant it?
In Russia, in Brazil, somewhere in Africa?
So definitely not in Europe, because not so much space.
Available, which basically not used for other purposes, for agriculture or other productive purposes.
So that's why the idea moved towards this direction.
Also, it was more easier to, let's say, to sell to the voters because investments done at your home, working places created at your home, but at the same time, you're kind of fighting a global problem.
In this situation, climate change is a very specific story.
Because we have one atmosphere for all the planet, it's very unusual compared with other problems.
If you want to give people access to the water, you need to do something where these people live.
If you want to do something with climate change, you can do investment in your own territory, benefiting your industry and your taxpayers, but still fighting global good.
Actually, what happened, happened exactly what it should happen.
So, by applying something that is relatively expensive, slowly, slowly, local industries start to be not very competitive.
Like a result, vacant places and production start to...
Shift away to the countries where it's more competitive to do.
So, like result, that is what really happened.
So, who is leader today in terms of the solar panels, in the wind, basically?
Of course, China, electric cars.
So, that's what happened.
So, basically, Western countries started trend with decarbonization, trying to achieve one result, but in reality, another result was achieved during the same period of time.
What Western countries do today?
First of all, I'll tell about Europe because they're in forefront of all of these processes.
So, okay, domestic industry becomes not competitive.
So what do you do?
So firstly, you try to subsidize them using basically different budget money.
Okay, but then your competitors are starting to do the same.
I'm talking about China or other countries or United States.
Like the famous inflation reduction act of President Biden, which is bringing a lot of money to subsidize renewable energy.
So we start competition of this.
Okay, one story.
But poor countries cannot compete.
They don't have money for this.
Second, what Europeans are doing and what will happen in other countries as well.
You start to create a barrier for the goods which is produced in other parts of the world, but which should enter your territory.
Meaning, if carbon reduction in your domestic place costs, I don't know what it costs today, maybe 80 euros, and if some producer produces goods in another place of the world where carbon reduction costs zero, so his products, when they're coming to Europe, he will need to pay duty.
It's the so-called CAPM mechanism.
They will need to pay duties to compensate the difference with the cost with European producers.
In other words, The story is pushed for other countries to follow the same agenda.
So that's basically where we are.
Step number one, it was logical to choose from the perspective of the Western countries to choose the scores on a certain moment of time.
So number two, it did not brought them too many good because basically simply they start to kill the industries which start to move to another place.
Now they're starting to do Step number three, trying to be protective, to create certain type of trade barriers based on the different carbon prices.
So that's where we are going.
Everything is nice, only it has nothing to do with the climate.
I mean, if you're focusing on reducing the activity that produces only 6% of greenhouse gases, then, I mean, you're probably not going to have a big effect on global climate, right?
What we know is that whatever we do, Temperature keeps rising.
Concentration of greenhouse gases and atmosphere keeps rising.
But at the same time, when we read numbers of the resources allocated towards the fight with human pollutions, what we see today, numbers are about $5 trillion annually.
In order for the world to be on the trajectory till 2030, where we are trying to be, it requires about $5 trillion to be spent annually for this.
Roughly 5% of the whole GDP. It's comparable with the numbers which spend for all defense globally.
It's about 3.5 trillions, for example.
So, of course, these resources are not easily available.
And especially, they're not easily available in countries which don't have...
Financial means to attract this money from the market or don't have strong budgets or other possibilities.
So, like result, what happened?
Ability of the humanity to react on other important issues was greatly reduced.
The United Nations counted 17 sustainability development goals, like fight poetry, access to electricity, etc.
So climate, it's goal number 13 in this list.
Really, number 13. But that's the goal.
Allocate most of the resources.
And that's the problem.
So what I'm trying to say, maybe on a certain stage, it was a good idea that Western countries start to follow a particular way to combat climate.
Who cares?
If rich guys want to spend their money doing something good for the world in their own territories, you can only say thank you, nothing else.
But now this story starts to affect others very much.
More poor countries, countries who cannot really compete with the Western countries in this type of arrangement.
And what it means?
It means this policy is more or less clear now for everyone.
It very much depends on what will happen in other countries.
Because by itself, it's important if the American industry will be competitive with these prices.
Because if it's competitive with these prices, the market will adjust itself, and at the end of the day, it will be good for American people rather than bad.
But I don't think other countries will follow this agenda.
Agenda where just All basically added profit in the supply chain staying in few particular places in the world.
I think this type of world order is not sustainable and unlikely it will be possible to maintain it for a very long time.
And also, don't forget one thing.
So all of this is done in order to fight climate change.
What I'm trying to say, all of these arrangements have nothing to do with fighting climate change.
Can I ask you one last question about energy before I get into the solutions that you think would actually work?
And that's AI. Server farms are a massive draw of energy, and AI seems to, as projected, be one of the biggest consumers of electricity in the United States.
So, I mean, doesn't that kind of make the transition away from hydrocarbons impossible?
So it's basically either CO2 or if it's very wet, then it will be NH4, methane.
So that is what's happening.
So what I'm saying is that more exposure for organic matter, which is underneath permafrost, longer this exposure with the atmosphere, more emissions coming out of that.
So, that is what's happening now.
So, what are the numbers?
Actually, it's strange, but numbers are not well known now.
Not so good research exists in this area.
It's accelerating now, but for now, we don't have reliable numbers.
There are a number of publications, but differences in measurements are very big.
But mostly, estimation will be about 7-8 gigatons of emissions in the, let's say, 10 period of time.
So, numbers are like this.
It's slightly bigger than the United States' anthropogenic emissions.
So, basically, it's a significant number which is coming from there.
So, when we talk about natural-based solutions on the permafrost, if I understood the question correctly, the idea is very simple.
So, how you can reduce time which organic matter exposed to the atmosphere?
How you reduce this time?
Basically, you need to keep the surface cooler.
For a little bit longer period of time.
That's what you need.
And there are a number of techniques how you do it.
There are techniques where you basically apply some things on top of the ice, and it melts much slower than it will melt otherwise.
There are things which include natural solutions.
For example, you can put animals in a certain area, and when animals are walking in this area, they are pressuring snow.
And what means pressure of the snow?
So if snow is, let's say, 3 meters, then on top of the snow, you will have temperature maybe minus 40 degrees, but beneath, you will have, I don't know, minus 5. It's kind of a blanket.
So, like result, temperature beneath the snow, which was pressed by the animals, will be lower, and like result, exposure of the surface to the atmosphere during summertime will be shorter.
So, no, that's another possible technique.
So, in reality, these techniques align to mitigate quite a lot in terms of the emissions.
Natural-based solution, it's an area where there are very many problems with accounting, with correct measurements and everything.
So, the problem is that we don't have a system which allows us to objectively control the flow of the greenhouse gases to the atmosphere or absorption them from the atmosphere.
Today, basically, why you will do something what doesn't make sense for you.
Okay, stepping backwards.
If warming of the planet is good or bad for Russia, honestly speaking, it's rather good than bad for a number of reasons.
Of course, some areas will experience maybe more complicated conditions for agriculture and everything.
But on average, our agriculture production will move more north, which will allow to grow more rather than less.
Because we are a northern country, so we spend a lot of energy to allow people to live in this condition.
So when the temperature is going up, again, you spend less.
So what I'm trying to say, economically, the increase of the temperature is actually good in Russia if you take it in combination of the factors.
So why somebody will do something in case it's good for him to do nothing?
That's one question.
No, it's possible.
But then it should be some market for this.
So for Russia, it's good.
But for somebody, it's bad.
Perhaps some arrangement can be done when somebody paying for the basically decrease of certain emissions and use it against their country obligation or something like this.
Exists the so-called Paris Agreement and exists a certain bureaucracy.
There are certain bureaucracies that work as part of the secretariat of this agreement.
Today, that's how it's organized.
Today, countries are concentrated on the reduction of anthropogenic emissions.
But it's perfectly feasible, without changing anything in the Paris Agreement, to organize two things which are needed.
Firstly, to go to the other solution.
Natural-based solution with emission and actually to include all better effects also in the consideration, like another possible option to affect temperature on the planet.
So that can be perfectly done, like part of the Paris Agreement.
Step number one.
And step number two, we need a global market for the carbon.
So when basically, because only global market can distribute resources in the best possible way.
For the unit of economic resource, you can get more value.
In this case, value is how many emissions you can cut.
So we need two things.
One, technological neutrality, to don't concentrate on the human guilt, but try to do all what works, regardless how you've done it, on nature or with humans.
And second, what you need to do, you need to do a world market.
Paris Agreement envisioned the world market.
It exists Article 6.2, 6.4 of the Paris Agreement, but these articles are blocked today and they're not operational.
If you were to say to a leading spokesman for the climate change agenda 2024, whether it was John Kerry or Al Gore, Greta Thunberg, actually what we need to do is put more reindeer on the permafrost, paint the roofs white, and plant more forests.
How I said Paris Agreement, it's a creation of the certain historical period.
So, it was sold to many countries at this time.
It was very strongly supported by developing countries at this time.
Why, for example?
Because developing countries didn't have an obligation to cut their emissions by part of this.
But they expected to receive a lot of support in order to follow the agenda, which they didn't realize at the end.
So, actually, it's realized, but in a way that now you can take money for something green.
But you cannot take money for hospitals, water, or other things which are important for you because it's the same money.
So, what I'm trying to say.
So, basically, movement in any case will move towards the direction where anthropogenic emissions will not be enough.
So, that is happening in any case.
Firstly, because fighting just anthropogenic emissions would not bring us where we want it to be.
And second, because this course creates so many uncertainties and disproportions in the world that one by one by one by one, different players will find that it doesn't make sense for them to be part of this agreement.
That's what will happen.
That's why, what to say here?
So, if time is coming that this question should be addressed seriously, I mean, the question of the fighting temperature of the surface.
Not a question of fighting, of killing the economic activity of the guilty humans.
So if the question is really starting to be addressed seriously, then it takes, of course, a strong leader, just to say it.
This leader, it's a question when it will come, but I'm pretty sure it will happen.
Today, this Paris Agreement process basically run by the bureaucracy.
How it works, for example.
I told you that Article 6.2 and Article 6.4 is blocked.
That's a good example.
So, by whom they block?
By Europeans.
By European Union.
So, I explain why.
It's pretty simple.
So, price in Europe today...
It's about €80 per ton of CO2 reduction.
So let's imagine we have a global market where basically you don't need to reduce emissions just on the European territory.
But when a European company can basically buy a reduction which happens in the places where it's cheaper to do.
Let's imagine we're in this market.
What will be the price of such a global market?
I would say $30 will be my estimation.
So it will be much less.
What will happen with the countries which already exhaust the opportunity to cut emissions cheaply and brought the economy on the situation when price is 80 euros?
Let's imagine price tomorrow collapse from 80 euros to 30 dollars.
What will happen then?
Oh, crisis will happen.
Huge financial crisis will happen.
Because who basically took risks that certain investment will be paid back?
Banks or governments?
So if price is going down, So basically, many renewable sources becoming not competitive compared with fossil fuel sources, because this price of $30 moving prices down.
What is the result?
Big, big financial crisis.
So that's why, from one side, we are talking about how nice climate, and from another side, we are blocking the best possible mechanism to do it.
The United States did not have done this bad because it's a more rationally run system.
The United States, today, basically, what it does is subsidizing many producers, like part of the Inflation Reduction Act, subsidizing producers, giving money from the federal budget towards companies which are cutting their emissions.
Very big money, by the way.
$100 sometimes per ton of CO2, $80, $110 for certain applications.
So why do you need to spend federal money on something which is like $100 if you can purchase the same for about $10 somewhere else?
Where?
For example, in an African country.
Why you're not purchasing something where you can purchase for $10 and give jobs and something to the African country?
But at the same time, why are you sending grant money there, or basically help there?
Why do you think you said at the outset that you think a lot of this is a religious impulse, or it follows a religious template, where you identify the sin, you find the sinner, you force the sinner to repent, and then you get to paradise.
Why do you think Western countries, which are not religious, Have chosen that rather than a scientific approach to a scientific problem?
Because there is only one country in the world who can actually change all of this paradigm in the climate agenda.
It requires strong leadership, and I see only one country in reality who can really do it, and that's the United States.
And why this reason can be?
Because exactly what you said.
So other considerations like energy security, etc.
are basically not a problem for the United States anymore.
So because it's not a problem, it's not objective reasons to basically go against this trend.
You remember, President Trump went out of the Paris Agreement when he became a president.
He suspected that the Paris Agreement, it's not exactly about climate.
He suspected that it's kind of the instrument to redistribute works, working places, or investment between different parts of the world, and perhaps not for the benefit for the American citizens.
We've spoken some minutes ago about the achievement of China in terms of the electric cars, wind turbines or solar panels.
So basically, yes, that was like this.
So after that...
When President Biden came back to the White House, he reversed the decision of President Trump.
And the idea was, of course, because it was a noble goal, still climate crisis needs to be addressed somehow.
So that was basically a decision from another side.
So that's where we are.
To be honest, I don't see why something cannot be done.
Which achieve both results at the same time, which keep the United States very much engaged in the process of the global climate agenda from one side, being the leader of the Paris Agreement or any other agreement which may come in its place.
But at the same time, to propose solutions which are basically beneficial for the whole system and specifically for the United States.
Because now in the United States it's not dependent anymore from the import of energy as such.
I mean, it's a little bit exported, a little bit imported, but the total balance is good in the United States.
So it will be economically much better, from my understanding, for American economy like its whole, to move to the direction where it's not a market which is closed in terms of the carbon market.
But open market, where basically American companies can do what they do and find a way how to deal with the emission in the best economically possible way.
Either decrease it domestically or go and purchase offsets produced in some other places.
So do what American business always know to do the best.
But I think, I guess I agree with everything you're saying, except I think that this is what we're watching is less rational than you assume.
I think if you said to people, what we're going to do is increase the number of trees and big mammals, which seems to me inherently good, they would say that's not enough punishment for people.
They're not suffering enough for their sins.
I do think that would be the reaction in the West.
Basically, energy security is also a big issue for China because a lot of energy is imported and also domestic production of energy is mostly coal in China.
And what's happening with coal production?
Depths of the shafts and everything increasing because most profitable reserves are getting exhausted.
That's why energy security is getting...
That's an issue for China.
So that's why for them to build more and more renewables, it makes perfect sense from their perspective, because they deal with two problems, not only with the climate.
And that's perfectly competitive, how to say, it's perfectly aligned with what Western countries do today.
So for them, renewables, it's needed.
For them, energy transition, it's needed, because firstly, they need it for their energy security.
And second, They're really able to create new industries in a very fast and very organized manner, because their system allows to concentrate resources on strategic goals maybe faster than normal market economy would do.
So they can establish a group of the industries, call them champions, support these industries by all government means, and perhaps these industries...
Can take a global leading position much faster.
That is what's happening in China.
So, yes, the insight of this paradigm of the fighting of the fossil fuels, yes, they have their reason why it works for them.
But at the same time, China also doing a lot.
Today, it's the biggest, actually, contributor to natural-based projects.
However, they plant most of the trees than other countries did in order to offset emissions.
The Chinese company looking on the other markets in order to do projects, they offset their home emissions.
So I think they're doing pretty well, pretty logical.
So, methane and CO2 are two different greenhouse gases.
So, the question is, how do you compare, let's say, harm caused by one greenhouse gas versus harm caused by another greenhouse gas?
It sounds like a simple question, but actually it's not.
Why?
Because the molecule of CO2, when it sits in the atmosphere for half a lifetime, It will be much longer than half-life time of the molecule of methane.
So, what it means?
It means you have 100 molecules of methane in the atmosphere.
Seven years after, it will be 50 molecules remain in the atmosphere.
With the coal, basically, it will take, let's say, 100 years before half-life will be achieved, something about 100 years.
That's why you don't have a clear answer on how harmful it's one molecule versus another molecule.
So, how you can answer now on this question?
So, if you take a period of time, let's say 100 years, today's number is 32. It means one molecule of methane is more harmful in terms of global warming than one molecule of CO2, 32 times.
But it's on the period of time, 100 years.
But if you take not 100 years, but 30 years, numbers will be very different.
The number is 83. So, during this period of time, a molecule of methane...
More harmful than the molecule of CO2 on another number.
That's why, if basically you use a ratio of 32 on the 100 years' time, and if your goal is to equalize two harms on the 100 years' term, then most of the basically power plants which are running on the gas will be better than power plants running on coal.
Coal will die.
But if you're trying to orient basically on the shorter period of time, like 30 years, for example, that is something that's interesting to you.
Well, given how hard it is to measure even something that straightforward, it seems straightforward, how do we know what global temperatures are doing?
There are certain reverse loops, and we don't understand how exactly they will work.
So, when surface of the planet is heating, for example, ice is melting.
When ice is melting, more emissions coming underneath of this ice if it's permafrost.
Or, for example, more water vapor coming in case if it was Ice on top of the ocean.
That increases the effect of the heating once again, because all of these gases are coming to the atmosphere.
So, certain loops exist.
Exist other loops in the climate system.
So, where is the big danger?
The danger is we don't really know.
The system is so complicated, the total balance in the atmosphere is so complicated that we don't really know what can be...
What they call tipping point, the moment when the system will start to behave abnormally, when the number of events, not good events, will start to increase faster than it's doing now.
So we don't know it for sure.
We don't know it for sure.
So again, there are people who believe and there are people who learn.
So, of course, the more complex question you go, the amount of believers becoming...
So last question, which I really don't understand, but climate protesters in Europe have been destroying Renaissance paintings, no modern art, but all Christian art, in the name of ending climate change.
How do you get from a concern about global temperatures to destroying art?