Macro-level implications of the energy system transition to net-zero carbon emissions: Identifying quick wins amid short-term constraints

Marko Raseta, Andrew G. Ross and Stefan Vögele

Economic Analysis and Policy, 2025, vol. 85, issue C, 1065-1078

Abstract: Countries are increasingly committing to achieving net-zero carbon emissions while addressing energy security concerns heightened Russia's war of aggression against Ukraine. A key challenge lies in the long-term nature of these goals, which often conflict with shorter political cycles, necessitating consistent political commitment to transform energy systems and secure public support. Existing research frequently overlooks short-term impacts, focusing instead on long-term effects. However, an analysis centered on the short term can uncover immediate challenges, such as ensuring the security of energy supply, identifying potential bottlenecks and barriers that might hinder the timely implementation of policy interventions, and highlighting immediate benefits, such as job creation from renewable energy investments. These short-term considerations are crucial for fostering public support and facilitating a timely transition toward a sustainable energy future. This paper examines the short-term macroeconomic impacts of energy system transformations by utilizing a dynamic disequilibrium Input-Output model linked to an energy system optimization model. The results indicate potential dividends for both the environment and the economy, along with enhanced energy security. The analysis underscores important policy considerations, including potential crowding-out effects resulting from constrained labor markets and supply chains—elements that are often neglected but are crucial for achieving timely energy security and policy objectives. Given the current economic climate, influenced by the recovery from the COVID-19 pandemic and the ongoing Russo-Ukrainian war, it is essential to take these potentially obstructive factors into account when planning and implementing energy, economic, and environmental policies.

Keywords: Energy system transformation; Energy security; Economic impacts; Economic analysis; Socio-economic analysis; Energy policy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:85:y:2025:i:c:p:1065-1078

DOI: 10.1016/j.eap.2025.01.011

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