Based on the latest energy data and market developments, this year’s WEO explores key questions about the crisis: Will it be a setback for clean energy transitions or a catalyst for greater action? How might government responses shape energy markets? Which energy security risks lie ahead on the path to net zero emissions? The WEO is the energy world’s most authoritative source of analysis and projections.

This report by the World Trade Organization (WTO) and the International Renewable Energy Agency (IRENA) looks at how open, transparent and inclusive trade policies can support cost reductions, deployment of components and job creation in the solar PV sector, strengthening the critical infrastructure needed to fight the COVID-19 pandemic and supporting efforts to rebuild the world economy. The report examines the need for countries to develop a robust quality infrastructure to promote safe trade in solar PV goods and services. This would reduce the risks of unreliable products entering the value chain, and ensure stability for investors and other participants in the value chain. The report also looks at the need to strengthen international cooperation, and demonstrates how IRENA and the WTO can support efforts to promote a secure and inclusive global solar PV market through the effective use of quality infrastructure.

Policymakers have mostly responded to the shock with broad-based price-suppressing measures, including subsidies, tax reductions, and price controls. Going forward, the policy emphasis should shift rapidly towards allowing price signals to operate more freely and providing income relief to the vulnerable. The surge in energy prices will encourage energy conservation and investments in renewable energy, but the manyfold rise in natural gas prices could lead to a persistent switch towards coal. To ensure steady progress towards carbon emissions reduction goals, authorities could use the opportunity to strengthen carbon pricing when global fossil fuel prices decline in the future. Non-price incentives for investments in energy efficiency and renewable energy should also be enhanced, as envisaged in the RePowerEU plan.

However, a longer full shut-off of Russian gas to the whole of Europe would likely interact with infrastructure bottlenecks to produce very high prices and significant shortages in some countries, with parts of Central and Eastern Europe most vulnerable. With natural gas an important input in production, the capacity of the economy would shrink. Our findings suggest that in the short term, the most vulnerable countries in Central and Eastern Europe — Hungary, Slovak Republic and Czechia — face a risk of shortages of as much as 40 percent of gas consumption and of gross domestic product shrinking by up to 6 percent. The effects on Austria, Germany and Italy would also be significant, but would depend on the exact nature of remaining bottlenecks at the time of the shutoff and consequently the ability of the market to adjust. Many other countries are unlikely to face such constraints and the impact on GDP would be moderate—possibly under 1 percent. Immediate policy priorities center on actions to mitigate impacts, including to eliminate constraints to a more integrated gas market via easing infrastructure bottlenecks, to accelerate efforts in defining and agreeing solidarity contributions, and to promote stronger pricing pass through and other measures to generate greater energy savings. National responses and RePowerEU contains many important measures to help address these challenges, but immediate coordinated action is called for, with specific opportunities in each of these areas.

We find that renewable energy is associated with a significant reduction in wholesale electricity prices in Europe, with an average impact of 0.6 percent for each 1 percentage points increase in renewable share. We also find evidence for a nonlinear effect—that is, higher the share of renewables, the greater its effect on electricity prices. On the other hand, while quantile estimation results are mixed with regards to the impact of renewables on the volatility of electricity prices, we obtain evidence that renewable energy has a negative effect on volatility at the highest quantiles. Overall, our analysis indicates that policy reforms can help accelerate the green transition while minimizing the volatility in electricity prices.

In particular, IRES provides of a set of internationally agreed recommendations covering all aspects of the statistical production process, from the institutional and legal framework, basic concepts, definitions and classifications to data sources, data compilation strategies, energy balances, data quality issues and statistical dissemination. The ESCM is written primarily for practitioners that are tasked with building up or improving the energy statistics programme of a country or institution in a way that is consistent with the latest international standards and produces reliable and internationally comparable data.The ESCM aims to assist countries in the collection, analysis and dissemination of energy statistics to international standards. Its purpose is to complement IRES by providing explanations that make it easier to apply the principles defined in IRES in practical applications, to understand specific relationships that facilitate or complicate the adaptation of such principles to national situations and therefore provide practical ways to implement an energy statistics programme that is consistent with the established international recommendations.

In addition, per capita consumption series are also provided for all energy products. Graphs are included to illustrate historic trends and/or changes in composition of production and/or consumption of major energy products. Special tables of interest include: international trade tables for coal, crude petroleum, and natural gas by partner countries – providing information on direction of trade; selected series of statistics on renewables and wastes; refinery distillation capacity; and a table on selected energy resources.

Electricity production and electric installed capacity are disaggregated by source, as coming from combustible fuels, hydro, nuclear and other sources; and by type of producer, whether from main activity producers or autoproducers.

The options to support energy markets, vulnerable households, and firms will vary, depending on specific country contexts, including exposure to gas and electricity supply risks and the fiscal space available to mitigate their impact. Well-coordinated and calibrated fiscal and monetary policies are needed to manage the impact of the price shock. Countries will also need to consider the implications of any policy choice on the transition to a greener economy and development trajectories. This note is organized as follows. Section 2 provides an overview of the broader economic impact of the energy price shock on economic growth, inflation, and public finances in the ECA region. Section 3 provides policy options to help countries adapt to the energy crisis related to managing both demand and supply. Section 4 presents a set of principles to guide the policy response for supporting vulnerable households. Section 5 presents a set of principles to guide the policy response for supporting firms. Section 6 concludes with a summary of recommendations for dealing with the crisis and transitioning to a greener economy.