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

March 1, 2024

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Format: Chicago

Hugo Rojas-Romagosa. Medium-term Macroeconomic Effects of Russia’s War in Ukraine and How it Affects Energy Security and Global Emission Targets, (USA: International Monetary Fund, 2024) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Commodities, Economic sectors, Electricity, Environment, Exports, Greenhouse gas emissions, Imports, International trade, Natural gas sector

Keywords: Baseline share, Computable general equilibrium, Electricity, Energy security, Energy supply, Europe, Exports, Global, Greenhouse gas emissions, Imports, Natural gas sector, Oil import, Trade disruptions, W.r.t baseline price, W.r.t. baseline price

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2024/039
Stock No:

WPIEA2024039
ISBN:

9798400264269
ISSN:

1018-5941

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