The war in Ukraine poses serious economic challenges to the countries of Europe which must imperatively ensure their energy security and manage the Ukrainian refugee crisis, recommends the International Monetary Fund (IMF) in its regional report published on Friday.
The offensive launched two months ago by Russia has put a brake on the growth of the Old Continent with a growth forecast of 1.6% this year, against 3.8% expected in January. Above all, “the war reminds us that Europe must do more to improve energy security, in particular by developing renewable sources and improving energy efficiency”, summed up Alfred Kammer, the IMF director in charge of Europe in a blog.
What does the IMF propose on gas and energy production in Europe?
The Russian gas in question
Russia is Europe’s largest natural gas supplier. The interruption of gas imports, in retaliation for the Russian invasion of Ukraine, is one of the options discussed within Western countries to put pressure on Moscow to cease hostilities. But Russia could itself decide to cut off the tap, putting supplies in Europe at risk.
The IMF has calculated that a total disruption of Russian gas and oil supplies could potentially cost the European Union economy 3%.
But then, can Europe do without Russian gas? Yes… for six months. Beyond that, the economic impact “would be severe”, emphasizes Alfred Kammer. In summer, the needs are lower and European countries could also draw on their stocks. However, reducing inventories to critical levels would put strong upward pressure on prices, which are already at record highs.
“On the other hand, if the interruption were to last until winter, or even over a longer period, this would have significant (negative) effects” on the European economy, continued Alfred Kammer, pointing to the serious risk cuts during the winter.
What can Europeans do for their gas stocks?
Europe has solutions according to the IMF, even if they would only offset 60 to 70% of Russian imports. Economists recommend that countries prepare now for the next winter season both by diversifying their gas supplies, by replenishing gas stocks and by developing alternative energy sources.
Some countries have already started to implement energy security measures. For example Bulgaria, Germany and Italy are looking for alternative suppliers.
Some, like Belgium and Italy, are delaying the exit from nuclear power plants and coal-fired power generation.
Who else can supply gas to Europe?
Member States have already started to turn to Algeria or Norway.
What about alternative energies?
The IMF calls for “scaling up” measures to develop renewable energy sources and improve energy efficiency as part of the green energy transition.
The problem is the construction and/or development time.
Will the consumer be involved?
Consumers also have an important role to play in participating in the collective effort. Governments can raise awareness among their population through “information campaigns to reduce energy consumption”.
“The consumer can act now”, insists Alfred Kammer. “And reducing energy consumption makes it possible to store more gas (…) which will make it possible to attenuate the effects of subsequent cuts” potential.
What about French nuclear power?
The French nuclear industry is not particularly dependent on strategic materials from Russia and the volume of activity with this country is “not significant”, indicated Cécile Arbouille, general delegate of the French nuclear industry group. (GIFEN). “Industrialists in the sector are affected like other industrialists due to the volatility of prices, for example of raw materials, transport…”
“But unlike other sectors, we are not dependent on specific products that would come from Russia, at least not in the short term,” she said. This distinguishes nuclear from other sectors such as aeronautics, which needs titanium, of which Russia is a major producer.
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