Medium-term Macroeconomic Effects of Russia’s War in Ukraine and How it Affects Energy Security and Global Emission Targets

Hugo Rojas-Romagosa

No 2024/039, IMF Working Papers from International Monetary Fund

Abstract: Russia’s war in Ukraine has disrupted the supply of natural gas for many European countries, triggering an energy crisis and affecting energy security. We simulate the medium-term effects of these trade disruptions and find that most European countries have limited GDP losses but those more dependent on Russian natural gas face moderate losses. European fossil fuel consumption and emissions are reduced and after accounting for the war impacts, achieving Europe’s emission targets becomes slightly less costly. In terms of energy security, the war eliminates European energy dependency from Russian imports, but most of the natural gas and oil imports will be substituted by other suppliers. We also find that constructing a new Russian pipeline to China does not provide significant macroeconomic benefits to either country.

Keywords: Energy supply; energy security; trade disruptions; greenhouse gas emissions; computable general equilibrium; baseline share; w.r.t. baseline price; w.r.t baseline price; oil import; Natural gas sector; Imports; Exports; Electricity; Europe; Global (search for similar items in EconPapers)
Pages: 41
Date: 2024-03-01
New Economics Papers: this item is included in nep-cis, nep-ene, nep-env, nep-int and nep-tra
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