IMF: Renewables have mitigated the costs of the energy shock in Europe; let’s press ahead with the green transition
Thanks to the contribution of green energy sources, the economic impact has been less severe than feared. With growth running low, even a relatively minor crisis risks plunging the Eurozone into recession. Without fiscal consolidation, the debt will become unsustainable
Cutting public debt, reducing dependence on fossil fuels, and boosting productivity. The IMF’s report on Europe, which has just been published, sends a clear message to an economic bloc that has weathered the shock of the war in the Middle East better than expected, but whose growth remains too slow.
Driving the green transition
First, the Russian invasion of Ukraine, and then the US attack on Iran, have demonstrated, once again, the cost of dependence on fossil fuels. And the Fund’s report on Europe begins by highlighting precisely the role that green energy is playing as a factor in resilience in the face of the energy crisis: ‘The economic costs of the war in the Middle East,’ it states, ‘would have been even more severe without the commitment to renewables’.
According to the Fund’s analysis, the adoption of green energy sources, combined with greater energy efficiency, has reduced the impact of rising oil and gas prices on household energy bills ‘by around 8 per cent’.
Noting that, for Europe, the energy transition is not just a climate issue, the IMF states that pressing ahead with it “is essential for lowering energy costs and reducing dependence on fossil fuel imports”.
The IMF also defends the European Union’s main instrument for achieving these objectives, namely the carbon emissions trading scheme, which has come under fire from governments such as Italia’s and from energy-intensive industrial sectors. The ETS, the report states, helps ‘to maintain clear price signals and to support long-term investment decisions’.
