Critical impact

Neil Eisberg | Editor

Russia’s illegal invasion of Ukraine has shone a stark spotlight on the inter-related, and particularly interdependent, nature of the modern globalised world. And the impact of this heinous act will have repercussions long after any resolution of the situation.

While all the consequent actions taken by countries around the world will also have effects on the populations within those countries as well as individuals in Russia, none will compare with those on the citizens of Ukraine – yet another country that will have suffered major damage to infrastructure all the way down to the individual homes and lives of residents.

After WWII, the Marshal Plan was put in place to help rebuild the countries that had been devastated. The German population set about rebuilding their country, turning it into one of the wealthiest countries in Europe. Given the well-demonstrated determination of Ukrainians, one can only hope that they too will be able to rebuild in a similar fashion as an important component of a democratic Europe – but it will need to be funded, so perhaps a new Plan, perhaps named after Ukraine’s impressive president needs to be put into place as soon as possible.

If NATO, for example, is unable to intervene militarily in the present conflict due to the possible actions of the paranoid megalomaniac residing in the Kremlin then it should be putting into place plans for the future of Ukraine, and even possibly Russia once its demented leader is ousted. Pulling investment, products and services out of Russia is just one aspect of a global response. We need to be looking to the future.

As reported in the media, ranging from daily newspapers, TV and radio through to digital media outlets, companies are responding to the multiple calls for sanctions, disinvestments together with the pursuit of oligarch properties and assets. Energy companies like BP, Shell and Exxon are, for example, shedding investments, pledging to cease investing and closing down operations, while aerospace companies like Boeing and Airbus are withdrawing from the Russian market; electronics companies like Apple are pulling out of sales; and shipping companies like Maersk stopping operations.

But what of the chemical and related industry sectors, like pharma and biotech? To begin with there has already been an impact on raw materials, like metals, and energy and supply lines, something that can only worsen (see p5, 8 & 9). As C&I goes to press, most of the major chemical companies have yet to make any statements about the invasion, however, BASF has said it will only fulfill existing responsibilities (p9) while Solvay and Clariant are suspending all Russian operations.

And the same is true for many pharma companies, however, companies including Roche, Sanofi and Novo Nordisk are planning to support Ukraine with drugs and other medical assistance.

The CEOs of biopharma companies in the US, however, as well as drug developers, venture capital firms and other investors, have signed a letter in multiple languages calling Russia’s war on Ukraine ‘a barbaric act’, adding ‘we cannot look back in the future wondering whether we could have taken stronger measures’.

But around the world, the now accelerated energy crisis still needs to be managed. In the UK, for example, many observers believe the UK Government’s approach has been ‘dangerously incoherent’. With, on one hand, the UK Prime minister calling openly for increased domestic gas extraction and bringing forward approvals for the development of North Sea gas fields, while regulators are acting to prevent on-shore-fields from ever being exploited. And there are many voices calling for a re-examination of the introduction of fracking.

Criticism of the UK’s ‘on-off’ attitude towards nuclear power is also increasing, particularly fueled by the German Government’s recent reversal of its planned elimination of nuclear power. In this issue, C&I looks at fusion – the so far elusive addition to the nuclear energy portfolio (see p26). The latest proposals from the Global Warming Policy Forum (GWPF)* highlight the need for low-cost government debt to finance a new generation of nuclear power plants, ideally of smaller scale than those currently envisaged, and hydrogen production through nuclear-powered electrolysis of water. Plans by Rolls Royce for small scale modular reactors are now being reviewed by the UK Office for Nuclear Regulation, and the UK Government has committed £210m of funding to support this process.

Director of Net Zero Watch, Benny Peiser has said: ‘It looks as though the Government still refuses to recognise the scale of the energy cost crisis. Unless they increase the supply of domestic gas, the UK will be stuck with very high energy prices for good while playing into Putin’s hand.’

Gas-using industries like chemicals are suffering from escalating prices. In the UK, Steve Elliott, chief executive of the UK Chemical Industries Association (CIA) noted energy prices increasing by at least 500%, and raw materials costs rising by an average 30% and shipping delays, even before the Ukrainian war.

The scale and cumulative impact of these rising costs will inevitably put pressure on investment decisions for global chemical businesses.

* J. Constable and Capell Aris, Realism or utopianism: A proposal for reform of the Net Zero policy, netzerowatch.com/content/uploads/2021/05/Alternative-Decarbonisation-Policy-1.pdf