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1. Moldova and Separatist Transnistria Facing Severe Energy Crisis

Author:
Jakub Pieńkowski
Publication Date:
01-2025
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Since 1 January, Ukraine—struggling to fight off the Russian invasion—has not extended permission for the transit of Russian gas to Transnistria, which had received free supplies from Russia, leading to an energy crisis. Moldova, in turn, has lost access to cheap electricity produced by the Transnistrian gas-fired power plant at Kuchurgan (MGRES), causing energy prices to rise dramatically. This weakens the prospects for the pro-European Party of Action and Solidarity (PAS) to remain in power after this year’s parliamentary elections.
Topic:
Separatism, Energy Crisis, and Russia-Ukraine War
Political Geography:
Moldova and Transnistria

2. The end of the energy price crisis must not mean the end of the energy transition

Author:
Valérie Plagnol
Publication Date:
04-2025
Content Type:
Working Paper
Institution:
Robert Schuman Foundation (RSF)
Abstract:
In many respects, Europe has recently experienced a rude awakening, albeit a salutary one. Barely recovered from the Covid pandemic, it has had to contend with the most serious energy supply crisis since the oil shocks of the 1970s, due to Russia's invasion of Ukraine and the subsequent disruption of Russian gas supplies, particularly via the Nord Stream pipelines. After electricity prices rose to extreme levels, their recent decline in Europe is particularly welcome. But this respite is far from enough. On the one hand, electricity prices are still higher than before the crisis and, on the other hand, they remain almost twice as high as those of our main trading partners, weighing on household purchasing power and business competitiveness. Such constraints, combined with rising geostrategic and trade tensions and the need to strengthen our common defence, have led some segments of European public opinion, including some economic actors, to question the efforts undertaken in the energy and climate transition. However, there can be no question of abandoning the path of energy transition, as the current tensions confirm the necessity and legitimacy of this approach. - This is, of course, about our climate future: numerous and consistent studies show that doing nothing rather than taking action will cost our economies and ourselves much more. - Geopolitical and economic tensions are accentuating the convergence between these imperatives and the need to strengthen our sovereignty, through diversification of supply sources and greater control of production cycles on our own soil. - The growing electrification of uses is generating a new industrial revolution – particularly in the mobility and artificial intelligence sectors – creating an economic and ecological dynamic that Europe is in a position to capture. Combining these imperatives therefore means accelerating the transition to energy and decarbonising our consumption. The current crisis has shown us that massive reliance on natural gas cannot be as stable a transition solution as we had hoped. Rising electricity prices have led to an acceleration of renewable energy projects and installations. More Member States support the development of nuclear power, better integrated into the overall mix and included in the European taxonomy. France, which is committed to renewing its facilities, is at the forefront of these efforts. Finally, strengthening and reorganising our electricity networks, including the development of interconnections, is already at the heart of our industrial strategies.
Topic:
Electricity, COVID-19, Energy Crisis, Russia-Ukraine War, and Energy Transition
Political Geography:
Europe

3. Unity in power, power in unity: why the EU needs more integrated electricity markets

Author:
Georg Zachmann, Carlos Batlle, Francois Beaude, and Christoph Maurer
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The energy crisis that started in 2022 reminded European governments of the resilience provided by relatively well-integrated European electricity markets, which have been painstakingly built-up over several decades. European Union leaders thus decided to reverse a creeping energy renationalisation and to invest in completing the internal market. However, there are some indications that this momentum is being lost, with different EU capitals taking different lessons from the energy crisis, at a time of unprecedented investment needs in generation and grids across the EU. The multiple benefits of enhanced EU energy-market integration should be emphasised. ‘Techno-economic’ benefits can be secured from optimising the design and operation of several national electricity systems jointly, rather than individually. These benefits will increase massively with higher shares of renewables and include less fossil-fuel burn and less volatile short-term prices, cost savings through harnessing regional renewables advantages, reduced need for expensive back-up capacity and flexibility, and enhanced resilience to shocks. In addition, greater energy-market integration will trigger benefits of a more managerial-governance related nature, though these are harder to quantify. They include benefits in terms of competition, innovation and credibility, which are particularly useful in the electricity sector, which typically faces rather long investment times and high degrees of concentration in purely national markets. Further market integration requires substantial political investment. Governments will need to deal with significant distributional effects within and between countries. Experience has shown that domestic political constraints in this respect are often numerous and difficult to overcome. Therefore, achieving the benefits of integration will require a vision on what degree of integration is feasible and desirable, and how to properly implement and govern it. It will also require an honest acknowledgement of the implications and costs of not pursuing greater integration.
Topic:
Markets, European Union, Regional Integration, Electricity, and Energy Crisis
Political Geography:
Europe

4. Europe’s under-the-radar industrial policy: intervention in electricity pricing

Author:
Ben McWilliams, Giovanni Sgaravatti, Simone Tagliapietra, and Georg Zachmann
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The different ways in which European Union member-state governments add levies to the price of electricity creates huge discrepancies in the prices paid by consumers. Europe’s energy transition depends upon increasing electrification of the economy and increasing the share of that electricity produced by renewable sources. Both factors raise the importance of electricity taxes set by governments. The energy crisis drew attention to this: as electricity prices soared, governments responded with billions of euros in subsidies to protect households and companies. While the acute phase of the energy crisis has passed, growing concerns about industrial competitiveness create political pressure for governments to continue with such subsidies or tax exemptions. High profile examples include the French reform of nuclear-power generated electricity pricing, and a political debate in Germany over how aggressively to subsidise the electricity price paid by energy-intensive firms. We frame the debate on intervention in electricity pricing around five distributional dilemmas concerning the recuperation of electricity expenses: 1) whether to raise general or electricity taxes, 2) the split between household and companies, 3) the split between energy-intensive and non-energy intensive companies, 4) cross-border effects, and 5) trade-offs in attracting new clean-technology manufacturing factories. Priorities according to these distributional criteria will differ by country, but these factors should be central to discussions. Governments must recognise that efforts to lower prices artificially for one group of consumers will raise prices for others, including with cross-border implications. The current compromises in the French and German cases do not pose substantial issues to the integrity of the European single market and do not penalise non-energy-intensive domestic consumers excessively.
Topic:
Industrial Policy, European Union, Electricity, Price, and Energy Crisis
Political Geography:
Europe

5. The European energy crisis: Shock therapy for the EU’s clean energy transition

Author:
Simon Dekeyrel
Publication Date:
01-2024
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
In 2022, Russia's invasion of Ukraine and weaponisation of Europe's gas supplies sparked an unprecedented energy crisis in the EU. This was made worse because the French nuclear fleet was partially shut down, and the summer droughts in the EU made it difficult to generate electricity from water. This Policy Brief analyses how effectively the EU and its member states have aligned their actions in addressing the energy crisis with the strategic goals of the European Green Deal. It also reflects on the outlook and main challenges for the EU’s clean energy transition and offers recommendations for the way forward.
Topic:
European Union, Gas, Green Deal, Energy Crisis, and Russia-Ukraine War
Political Geography:
Europe

6. Putin the Green? The Unintended Consequences of Russia’s Energy War on Europe

Author:
Mitchell Orenstein
Publication Date:
02-2023
Content Type:
Special Report
Institution:
Foreign Policy Research Institute (FPRI)
Abstract:
Both before and during its re-invasion of Ukraine in 2022, Russia cut energy supplies to Europe in an effort to force the continent to abandon Ukraine. Instead, Vladimir Putin accelerated Europe’s transition to green energy, decimating a key market for Russian exporters. Over the long term, Europe is well-positioned to win the energy war with Russia.
Topic:
Energy Policy, Markets, Renewable Energy, Energy Crisis, Russia-Ukraine War, and Invasion
Political Geography:
Russia, Europe, Eurasia, and Ukraine

7. El lugar de Venezuela en las restricciones chino-estadounidenses: una mirada desde la prensa española en el marco de la invasión rusa a Ucrania

Author:
Iván Luis Alonso Peláez
Publication Date:
01-2023
Content Type:
Journal Article
Journal:
Revista UNISCI/UNISCI Journal
Institution:
Unidad de investigación sobre seguridad y cooperación (UNISCI)
Abstract:
El artículo hace un recorrido histórico para conocer cuál ha sido el papel de Venezuela en el marco de las relaciones chino-estadounidenses, especialmente los cambios ocurridos a partir de 1999 con los gobiernos de Hugo Chávez y Nicolás Maduro. Acorde con lo descrito por la abundante bibliografía sobre el tema, se constata que se ha producido un cambio de roles en el que China progresivamente ha ido ocupando en Venezuela el espacio comercial preferente que tradicionalmente había ostentado Estados Unidos desde el restablecimiento de la Democracia en 1958. A través de un análisis informativo utilizando como fuente un grupo de textos periodísticos publicados en los seis principales diarios de circulación nacional editados en España, se valora cómo la invasión rusa a Ucrania promueve un todavía incipiente deshielo en el curso de las sanciones impuestas por Washington a la industria petrolera venezolana.
Topic:
Oil, Sanctions, Energy Crisis, Newspapers, and Russia-Ukraine War
Political Geography:
Russia, China, Ukraine, South America, Venezuela, and United States of America

8. German Economy in Winter 2023: Public budget under stress – Recovery faces headwinds

Author:
Jens Boysen-Hogrefe, Dominik Groll, Timo Hoffmann, Nils Jannsen, Stefan Kooths, Nils Sonnenberg, and Vincent Stamer
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The German economy is struggling to emerge from stagnation. GDP is likely to increase again in 2024, but the economic momentum will remain low. The strong growth in real disposable income will boost private consumption. However, the increases in interest rates continue to weigh on construction investment and there are no signs of large impulses from the world economy ahead. Moreover, the fiscal consolidation because of the Federal Constitutional Court's judgement on the supplementary budget for 2021 will slow economic expansion. There is uncertainty regarding the exact structuring of the reductions in expenditure as well as their economic impact. In the forecast, the additional savings will reduce growth in GDP by around 0.3 percentage points in 2024. Overall, we now expect GDP to increase by 0.9 percent in the coming year and thus at a slower pace than in our autumn forecast (1.3 percent). In 2025, economic output is likely to increase by 1.2 percent (autumn forecast: 1.5 percent). The decline in the current year of 0.3 percent will be slightly lower than expected in the autumn (-0.5 percent). Inflation has fallen significantly. For the next two years, we expect rates of 2.3 percent (2024) and 1.8 percent (2025), after 5.9 percent in the current year. The low economic momentum is leaving its mark on the labour market. However, demographic change and the associated shortage of skilled labour are counteracting this. The government's financing deficit is expected to fall from 2.5 percent relative to GDP in 2022 to 0.7 percent in 2025. The debt level will fall from 66.1 percent to 62.4 percent in the same period.
Topic:
Monetary Policy, GDP, Economy, Business, Energy Crisis, and Emerging Economies
Political Geography:
Europe and Germany

9. Where Does the Money Go? An Analysis of Revenues in the GB Power Sector During the Energy Crisis

Author:
Serguey Maximov, Paul Drummond, Phil McNally, and Michael Grubb
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The gas crisis has fed through to a huge impact on wholesale electricity prices in Britain. We use hourly price and generation data to estimate the impact on associated revenues to different types of generators. Given the extent of forward contracting, we complement simple results based on the day-ahead prices (“Case 1”) with a more realistic case based on a representative, technology-specific assumptions on forward contracts (“Case 2”). We estimate that revenues to GB generators rose by almost £30bn, from about £20.5bn/yr (pre- Covid) to £49.5bn in 2022. About 70% of this accrued to gas generators (from about £6bn/yr to £19bn) and renewable generators with Renewable Obligation Certification (from £7.7bn to £15.5bn). There are various indications that the increase in revenues to gas plants significantly exceeded the rise in their input costs, and no reason to think the generating cost of these renewables significantly increased. Nuclear, and some other biomass and renewables also benefited. We find that the Electricity Generation Levy, introduced in Jan 2023, would have had limited impact on these numbers if it had existed in 2022 and is likely to have less impact in 2023. Finally, we discuss reasons and potential implications of the findings.
Topic:
Economics, Environment, Money, Energy Crisis, and Revenue
Political Geography:
Britain and Europe

10. Navigating the Crises in European Energy

Author:
Michael Grubb
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The energy crisis engulfing Europe is a crisis of both gas and electricity markets, with huge cost impacts on consumers across all European countries. In Britain, half of typical household energy expenditure arises from electricity. This paper examines how the cost of gas-powered generation feeds through to electricity bills, on the principle of marginal cost pricing, setting the price for most of the time though it accounts for only about 40% of GB generation. Combined with the steep decline in wind and solar costs over the past decade, this has resulted in an unprecedented degree of ‘cost inversion’ in the electricity system. We offer estimates of the increase of revenues across the wholesale market, and outline five principles for reform for addressing the combined challenges of energy costs and accelerating low-carbon transition.
Topic:
Climate Change, Energy Policy, Environment, Green Technology, and Energy Crisis
Political Geography:
Global Focus