The Energy Security Gains from Strengthening Europe’s Climate Action

By Geoffroy Dolphin, Romain A Duval, Hugo Rojas-Romagosa, Galen Sher

May 28, 2024

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Geoffroy Dolphin, Romain A Duval, Hugo Rojas-Romagosa, and Galen Sher. The Energy Security Gains from Strengthening Europe’s Climate Action, (USA: International Monetary Fund, 2024) accessed December 21, 2024

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Following the 2022 energy crisis, this paper investigates whether Europe’s ongoing efforts to cut greenhouse gas emissions can also enhance its energy security. The global computational general equilibrium model analysis finds that individual policy tools, including carbon pricing, energy efficiency standards, and accelerated permitting procedures for renewables, tend to improve energy security. Compared to carbon pricing, sector-specific regulations deliver larger energy security gains and spread those more evenly across countries, benefitting also some fossil-fuel-intensive economies in Central and Eastern Europe. This finding strengthens the case for a broad climate policy package, which can both achieve Europe’s emissions-reduction goals and deliver sizeable energy security co-benefits. An illustrative package, which would cut emissions in the EU, UK, and EFTA by 55 percent with respect to 1990 levels by 2030, is estimated to improve the two energy security metrics used in this paper by close to 8 percent already by 2030. Beyond the policies analyzed in the model, the paper also discusses the technology, market design, and supply chain reforms that Europe needs for an energy-secure green transition.

Subject: Climate policy, Environment, Imports, International organization, International trade, Non-renewable resources, Political economy

Keywords: Carbon tax, Central and Eastern Europe, Climate change, Climate policy, Climate policy instrument, Climate policy package, Diversification, Economic growth, Emissions trading, Energy prices, Energy security, Europe, Europe's Climate action, Global, Greenhouse gas emissions, IMF Library, Imports, Non-renewable resources, Technological change

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Departmental Paper No 2024/005
Stock No:

DPEA2024SEEGT
ISBN:

9798400265655
ISSN:

2616-5333

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