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Europe > Ukraine

You are looking at 1 - 3 of 3 items for :

  • Type: Journal Issue x
  • Energy conservation x
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Cover IMF Working Papers
Energy Support for Firms in Europe: Best Practice Considerations and Recent Experience
Mr. Anil Ari
,
Philipp Engler
,
Gloria Li
,
Manasa Patnam
, and
Ms. Laura Valderrama
The surge in energy prices due to Russia’s February 2022 invasion of Ukraine significantly increased costs for European firms, prompting governments to introduce a range of support schemes. Although energy prices had eased by early 2023, uncertainty around prices remains unusually large. Against this backdrop, this paper examines the case for government intervention and identifies best practices with a view to improving the design of existing energy support schemes, facilitating exit from those schemes, and preparing policymakers for a downside scenario in which energy prices flare up again. The paper argues that support should be limited in size, strictly temporary in nature, narrowly targeted, and accompanied by strong safeguards and conditionality, while preserving price signals as much as possible to encourage energy conservation. Finally, the paper reviews recent support schemes introduced by European governments in light of the identified best practice considerations.
Keywords:
Energy prices; energy subsidies; financial support; price caps; energy crisis; Russia’s invasion of Ukraine; energy support scheme; price signal; best practice consideration; Annex II; support scheme; Energy pricing; Energy conservation; Fuel prices; Solvency; Europe
Cover Selected Issues Papers
Impact of High Energy Prices on Germany’s Potential Output
Miss Yushu Chen
,
Ting Lan
,
Ms. Aiko Mineshima
, and
Jing Zhou
The surge in energy prices since Russia’s invasion of Ukraine has reduced the energy-intensive sector’s production in Germany, although the non-energy intensive sector’s production has held up thanks in part to firms’ efforts to improve energy efficiency. Energy prices are expected to remain elevated in the foreseeable future, compared to pre-war levels, adversely affecting firms’ productivity and thus lowering Germany’s potential output. Economic modeling suggests that this effect could be around 1¼ percent of GDP in staff’s baseline, with some uncertainty around this estimate, depending on the ultimate magnitude of the energy price shock and the degree to which increased energy efficiency can mitigate it. Policies can promote effective adjustment to the shock by increasing productivity and maintaining strong price incentives to conserve energy and invest in renewable energy production.
Keywords:
Germany; energy prices; energy efficiency; productivity; potential output; potential growth; directed technical change; price effect; price signal; surge in energy price; effect favor; optimization problem; energy efficiency response; Energy conservation; Fuel prices; Global
Cover IMF Staff Country Reports
Germany: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper highlights impact of high-energy prices on Germany’s potential output. The surge in energy prices since Russia’s invasion of Ukraine has led to a contraction in the energy-intensive sector’s production, while the nonenergy intensive sector’s industrial production has remained resilient. Permanently higher energy prices could reduce Germany’s potential output, but some of the impact is expected to be offset by firms’ endogenous response to improving energy efficiency. Some decline in Germany’s potential output level because of higher energy prices is likely unavoidable. However, good policies can help mitigate this loss and avoid exacerbating it. Increased energy efficiency is key to mitigating the adverse effects of the energy price shock. Higher labor and capital productivity can help offset output losses from higher energy prices. Government policy can help boost productivity by fostering innovation and human capital development, as discussed in more detail in the 2023 and previous year’s Article IV reports. Government interventions can help direct the transition to cleaner energy. It is important that Germany respond to the energy shock in ways that also support the green transition, given Germany’s goals to significantly reduce its CO2 emissions.
Keywords:
baseline energy price path; housing market crash scenario; house prices in Germany; reference scenario; price effect; BORROWER-BASED MACROPRUDENTIAL instruments in Germany; Energy prices; Housing prices; Energy conservation; Mortgages; Loans; Global