How it can be done

Ruediger Bachmann, David Baqaee, Christian Bayer, Moritz Kuhn, Andreas Löschel, Ben Mcwilliams, Benjamin Moll, Andreas Peichl, Karen Pittel, Moritz Schularick and Georg Zachmann
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Moritz Kuhn: Universität Bonn = University of Bonn, ECONtribute - ECONtribute: Markets & public policy
Ben Mcwilliams: Bruegel
Benjamin Moll: LSE - London School of Economics and Political Science
Karen Pittel: LMU - Ludwig-Maximilians University [Munich]

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Abstract: An end to gas supplies from Russia has recently become much more likely. Russian supply volumes have already been substantially reduced, and uncertainty about future supplies and the winter supply situation is high. In this study, we ask what the economic consequences would be of a complete halt to Russian gas imports at present (August 2022). Almost five months have passed since our first study, "What if" (Bachmann et al., 2022), on the economic effects of a March 2022 Russian energy import freeze. The debate sparked by the study has sharpened the focus on the issues and assumptions that are critical to estimating the economic costs of a Russian energy import freeze. In this study, we update the results based on the situation in August 2022.1 (i) We estimate the necessary demand reduction that would result if Russian gas imports were halted from August 2022 and discuss economic policy strategies to achieve this adjustment. (ii) We update our estimated expected economic costs and discuss practical examples of substitution options in the industrial sector. (iii) We evaluate the federal government's economic policy, in particular its decision to increase storage levels with continued gas imports from Russia since March 2022, but to largely forego measures to reduce gas demand in power generation, industry, and residential and commercial sectors.

Date: 2022-08
New Economics Papers: this item is included in nep-cis and nep-ene
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03880930v1
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Published in 34, Reinhard Selten Institute / ECONtribute. 2022

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Working Paper: How it can be done (2022)
Working Paper: How it can be done (2022)
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