Australia could be funding Putin’s war by unknowingly importing Russian oil, a new report reveals. Despite banning imports of Russian oil at the start of the war in Ukraine, Australia has continued to receive shipments from Indian refineries that are among the largest buyers of Russian oil. This means Australians could be funding Russia’s war when fuelling their cars, the analysis from the Centre for Research on Energy and Clean Air (CREA) finds.

“Our analysis shows that Australia is receiving oil cargoes from Indian refineries who are importing large volumes of Russian crude oil”, said Lauri Myllyvirta, lead analyst at CREA and co-author of the report. “This means Russian oil could be arriving into the Australian market, and by extension, Australian dollars could be funding Russia’s invasion into Ukraine.” Australia must tighten tracking of shipping and be vigilant about the source of its fossil fuel imports “to avoid being complicit in Russia’s war crimes”, Mr Myllyvirta said.

Sky high fossil fuel prices are filling Putin’s war chest

Driven by soaring fossil fuel prices, Russia’s revenues from oil, gas and coal exports in the six months since it invaded Ukraine totalled €158 billion (AUD $232 billion) in fossil fuel export revenues. This outstrips Russia’s total cost of the invasion, estimated to be €100bn (AUD $147 billion) during the same period. The current average prices of Russian fossil fuels have more than doubled since 2021. The result is that Russia is receiving windfall fossil fuel revenues that are far above previous years’ levels — even though export volumes are down overall. 

Although India imported almost no oil from Russia before the invasion, its refineries have spent €7 billion (AUD $10 billion) on Russian oil since the outbreak of the war. The refineries receiving Russian oil have been exporting approximately half of these oil products to other countries, including the US and Australia. But, the biggest buyer was the EU, which took 54 per cent of Russia’s oil exports directly, worth approximately €85 billion (AUD $125 billion).

It is these vast fossil fuel revenues that are enabling Russia’s military buildup and brutal aggression against Ukraine, CREA’s report outlines. Taxes and export tariffs relating to oil and gas historically correlate with Russia’s military expenditure and account for more than 40 per cent of Russia’s entire annual federal budget. As Kostiantyn Krynytskyi from Ukraine-based Centre of Environmental Initiatives said: “Every bombing that we’ve endured has been financed by fossil fuels.”

Motorists indirectly funding Russia’s war in Ukraine

Oil takes the largest share of Australia’s energy consumption, totalling 36 per cent. Moreover, the country has one of the highest oil consumption per capita and lacks fuel efficiency standards for vehicles, explained Mr Myllyvirta. The result is high Australian demand for foreign oil which “helps buoy the Kremlin’s revenue by pushing up global prices and demand”, he said.

Australia’s dependence on foreign oil means the country is unprepared for international embargoes and disruptions, said Richie Merzian, Climate & Energy Program Director at The Australia Institute. Australia imports 91 per cent of its liquid fuels, with three-quarters used for transportation fuel including petrol and diesel. “Australians would be concerned to know they could be unwittingly filling up at the bowser with Russian oil. This is only the latest example of Australia’s national security problem when it comes to transport fuels”, Mr Merzian said.

But, there are immediate steps the federal government can take to stop the flow of Australian dollars to Russia. In addition to tracking fuel shipments to prevent imports of Russian oil through indirect routes, Australia could strengthen its fuel security by improving fuel efficiency standards and encouraging electric vehicle (EV) ownership, said Mr Merzian. The previous government failed to deliver its Liquid Fuel Security Review in 2019, and since then, Australia has become less fuel secure. “Climate Change and Energy Minister Chris Bowen’s new EV Strategy provides an opportunity to reduce fuel imports by mandating better car standards. Robust fuel efficiency standards in line with Europe is a popular policy that will help Australians pay less at the bower and will help drive the uptake of cleaner vehicles”, he said.

Clean energy is key to fighting Putin’s war

Defeating Putin and all ‘petrostate autocrats’ will mean rapidly expanding renewable energy generation across the world, Bill McKibben wrote in February, the day after the invasion of Ukraine. “If you want to stand with the brave people of Ukraine, you need to find a way to stand against oil and gas”, he said.

Since the invasion, countries have accelerated their renewable energy transition to avoid high fossil fuel prices and dependence on Russian coal, oil and gas, CREA reports. For example, 19 European governments have strengthened their clean energy targets that will result in a 30 per cent reduction in fossil fuel use in the power sector by 2030, compared with 2019 plans. The US’ Inflation Reduction Act could lead to a 40 per cent reduction in greenhouse gas emissions from 2005 to 2030, and it is possibly the single most consequential piece of clean energy legislation to date. In addition, record wind and solar installations in China are putting the country on track to add 130–150 gigawatts of capacity in 2022.

But, despite such progress, billions in fossil fuel revenues continue to pour into Russia every week. “Although there are positive signs that countries are reducing their addiction to Russian fossil fuels by accelerating the move to clean energy, the process urgently needs to speed up”, said Mr Krynytskyi. “Sanctions work — they must be expanded and reinforced so that Russia cannot easily bypass them”, he said.