dilemma of water and energy crisis in pakistan essay

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Essay on Water Crisis in Pakistan | Essays for CSS

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Outline:Water Crisis in Pakistan

Water security has a direct impact on human security. It is a multidimensional challenge with complex undertones, as water security is both an increasing concern as well as critical for sustainable development. Before it is too late and Pakistan faces a drought across its entire territory, a comprehensive water policy needs to be prepared and implemented.

I. Introduction

Ii. water sources.

A. Water reservoirs / capacities Pakistan is having three basic reservoirs, namely mangla dam reservoir, Terbela dam reservoir and Chashma barrage reservoir. more small reservoirs like Warsak, Baran dam hub, Khanpur, Tanda, Rawal, Simly, Bakht khan Hamal lake, Mancher lake, Kinjhar lake and Chotiari lake Arealso included as small storage. The storage capacity of these reservoirs is as shown on the view foil. 1. Terbela dam reservoir World’s largest earth and rock filled dam was built at Terbela on river Indus in 1976 with a gross capacity of 11.62 maf and a live storage capacity of 9.68 maf. With the passage of time, due to silting, 24.6% of the storage has been lost and now it has a live storage of 7.295 maf. 2. Mangla dam reservoir Mangla reservoir is the second major storage of Pakistan. It was built in 1967 on river Jhelum with a gross capacity of 5.882 maf and live storage of 5.41 maf. Again due to siltation it has lost 13.2% of its storage and presently can store 4.636 maf of water. 3. Chashma barrage reservoir Chashma barrage is situated on river Indus and was built in 1972 with a gross storage of 0.870 maf and live storage of 0.717 maf. It has also reduced its storage capacity by 39.3% and is left with a storage capacity of 0.435 maf. B. Rivers C. Lakes and streams D. Underground water

III. Major uses of water

In Pakistan we utilize the water available to us for different purposes. The basic utilization is for irrigation and then used for power generation, drinking and also provided to some Industries. A. Irrigation Out of 240.22 maf, 172.21 maf water is utilized for irrigation purposes as shown on the view foil. In this the canal diversions is 105.23 maf; system loses are 144-40; rainwater is 6.0 maf; ground water is 41.30 and utility above rims is 5.28 maf. B. Power generation Water released by the hydropower plants returns to the river system. The reservoirs are operated on priority bases only for irrigation. Recent increase in thermal generation has reduced the potential conflicts between water releases from reservoirs for hydropower generation and irrigation. Now most of the annual storage is utilized for irrigation and not for hydropower, but conflicts do arise at times. C. Drinking Most of the rural and urban water is supplied from ground water through tube wells and hand pumps except few cities like Karachi and Islamabad/Pindi. Total urban and rural (domestic and commercial) requirements estimated is 10-15% of the surface water, out of which 80% return to the system, however with degraded quality. Net consumption is normally about 2% of the total water available. D. Industry Water is also utilized in Industries basically for cooling purposes and also in manufacturing processes. This utility is less than 1%.

IV. Causes of present alarming crisis

A. Water supplies are vulnerable and suffer from extensive losses B. Limited storage capacity C. Trans-boundary disputes intensifying river supply vulnerability D. Outdated distribution system and inequitable distribution of water E. Groundwater resource depleting rapidly due to over-pumping F. Extremely low water tariffs are distorting incentives for water conservation G. Low recovery and underfunded water infrastructure contributing to high water losses H. Gaps in governance leading to inefficient management I. Climate Change – a Major Emerging Challenge for Water Sustainability J. Reduced rainfall K. Poor water management L. Poor handling of industrial wastewater M. Climate change N. Lack of political will to address the governing issues O. Change in food consumption pattern and lack of proper water storage facilities P. Ignorance at the household level Q. Wastage of drinking water in non-productive means R. Corruption in water sector S. Mismanagement in irrigation sector T. Hydrological warfare- water terrorism by India India started almost every project without informing Pakistan which is in violation of IWT 1. Manipulation of the treaty terms There is a restriction of aggregate storage allowed to India over western rives via Annexure E of the treaty. India, however, is manipulating this provision by building a series of storages on western rivers, increasing storage and water regulation capabilities manifold. 2. Construction of Kshanganga dam India has recently awarded a tender for construction of 330 MW Kshanganga hydro-electric project (HEP), which will be built on Indian tributary (Kishanganga) of Jhelum River. Pakistan has announced a similar project on Pakistani side of River Jhelum. According to IWT, the country that completes the project first will win the rights to the river. Hence, despite costing 68% more than estimated, India is endeavoring to finish the project first. 3. Construction other dams on Western rivers India has plans to construct 62 dams and hydro-electric units on Rivers Chenab and Jhelum thus enabling it to render these rivers dry by 2014.19 U. Worrying level of deforestation V. Scientific implementation of water policy

V. Far-reaching reparations

A. Effects on agriculture in general and on economy in particular The adverse effects of water shortage on agriculture would have a spiraling effect on the prevailing level of poverty. 1. Less water means less agricultural yields and to fulfill the food requirements of the nation, we will be dependent on other countries. 2. Raising livestock is the main source of livelihood of rural areas. it is also an important economic activity, which contributes 9.7% of gdp, will be affected due to shortage of water. 3. Orchards of Pakistan bring home a healthy amount of foreign exchange, which can be affected due water shortage. 4. Due to less production of main crops, which are wheat, cotton, sugar cane and rice, the Industries related to them will suffer adversely. 5. Then due to drought and more dependency on ground water for irrigation, the water table will go down, and this will cause water constrains to the population. 6. Less agricultural outputs will compel people to head towards urban areas for jobs, which will increase the unemployment further. 7. The distribution of water is controlled from the center by IRSA (Indus river system authority) as per 1991 agreement between the provinces. Now the shortage of water will cause disputes between the provinces, which may cause harm to the national integrity. B. Implications resulting from India’s terrorism 1. Risk of breaching ITW India’s future energy and water demands, which are enormous, can compel her to undertake projects in violation of IWT. Certain quarters in India are already saying that IWT is more of a binding for India and should therefore be abrogated. 2. Possibility to divert water Though India does not have the capability to divert water from the western rivers at present, however, possibility of a project similar to China’s Great South-North Water Transfer Project can not be ruled out. 3. Internal and external political and armed conflicts Any reduction in water inflow to Pakistan at this stage will cause shortage of water for irrigation and if supplemented by adverse climatic conditions and other internal water mismanagement issues, can trigger inter-provincial water conflicts of serious magnitude. If India is found violating IWT at that point in time, then it will spark serious differences between India and Pakistan and might become prelude to a major conflict. 4. Negatively Impacting agriculture and damaging social life Most recently, water flows in Chenab has declined by 40 per cent to about 6,000 cusecs from a 10 year average of about 10,000 cusecs, mainly because of construction by India of over a dozen hydropower projects upstream, reduction in rainfall and diversion of river waters. Incase India resorts to stoppage of water as per her capability, 406 Canals and 1125 Dis tributaries will become dry rendering 0.35 million acres of cultivated land barren and eventually ruining a total of 7.0 million acres of fertile land. India’s decision to go ahead with Kishanganga HEP and four other dams in India administered Kashmir is geared not so much towards meeting its own needs as impoverishing Pakistan. Agriculture is Pakistan’s backbone and water flowing in the channels is its blood line. It contributes 21% to the GDP and employs 45% of labour force.24 Adverse effects of water shortage on agriculture would have a spiraling effect on the prevailing level of poverty leading to economic and social problems. 5. Lose of water annually To fill Baglihar Dam, India had consistently obstructed Chenab’s flow; resultantly Pakistan received only 19,351 cusecs on 9 October 2009 and 10,739 cusecs on 11 October 2009, when it should be receiving a minimum of 55,000 cusecs per day. Total loss was approximately 321,000 MAF of water. India has gained a water holding capacity on western rivers which can seriously affect water inflow at Marala HWs / Mangla Dam causing acute shortage of water for winter crop. Though, presently India is not capable of diverting water, possibility of a project similar to China’s Great North-South Water Transfer Project cannot be ruled out. 6. Effecting economic growth The growth rate of Pakistan’s agriculture is already decreasing due to water shortages. In order to achieve the required growth targets in agriculture, Pakistan needs an estimated 149 MAF of water in 2000, 215 MAF in 2013 The shortage of surface water will result in drought and more dependency on ground water for irrigation, hence water table will go down causing water constraints to the population. C. Threats to federalism D. Effects on health sector E. Floods and drought F. Impending war with India G. Energy shortage/crisis

VI. Recommendations

A. Building dams and reservoirs 1. Water development The construction of following dams should start immediately:- a. Chasha dam It would be located 200 miles upstream of terbela on river Indus. its gross storage capacity would be 7.3 maf and live storage 5.7 maf. Its power generation capacity would be 3360 mw. b. Kalabagh dam Kalabagh dam site is located 132 miles down stream of Terbela. Its gross storage would be 6.1 maf. It would have a power generation of 3600 mw. Here I shall further suggest that the construction of Kalabagh be under taken only, once all the provinces are convinced and willing to cooperate. c. Thal reservoir It would be located on the right bank of Chashma – Jhelum link canal, along the western bank of river Jhelum. Its reservoir would have gross capacity of 2.3 maf. d. Raised Mangla dam in this the present Mangla dam would be further raised by 40 ft and thus increasing its gross capacity to 9.5 maf. In addition, its power generation capacity would be increased by 15%. e. Mirani dam The dam is located on Dasht River about 48 km of Turbat town in Mekran division. Its main objective is to provide water for irrigation. Its gross storage is 0.30 maf. f. Gomalzam dam It is located at Khajori Kach on Gomal River in South Waziristan, about 75 miles from Dera Ismail Khan. Its main objective will be to irrigate 132000 acres of land, power generation of 17.4 mw and flood control. From these projects we shall be able to store additional 20maf of water. B. The National Water Strategy 1. Water developments 2. Water management C. Solutions to counter Indian water terrorism 1. Pakistan should highlight the importance of the issue on various international forums. Merely passing the political statements will not resolve the problem. 2. Indian intentions and needs should be distinguished on quantitative terms to highlight the real face of India among international community. 3. The treaty does not provide so many important issues like availability of water, effects of climate change and proportional increase or decrease of water in quantitative terms. Pakistan should look for proper strategic forum for deliberative discussion and policy options for these issues. 4. At present, renegotiating the treaty seems impossible and Pakistan has to relook its water policy in the given limits of treaty. Therefore, effective role of Indus Water Commissioners is the need of hour. 5. Interstate conflict can be managed through internal strength and same is the case with water conflicts. 6. Pakistani policy makers should understand the concept of conflict resolution and initiatives must be taken on capacity building as no one can compel any sovereign state (India or Pakistan) to act on morality. 7. There is serious need to work on water management as the available water is being wasted and the groundwater table is going below and below.

D. Need of robust diplomacy at regional and international level E. Introducing proper water usage fee F. Need for more forests G. Seeking assistance from international aid agencies H. Lining of canals and the optimal use of water for agriculture 1. Define the groundwater ownership 2. Legislation for licensing of groundwater 3. Increase the groundwater recharge for urban and rural areas under legal framework I. Control Water pollution 1. Including both the surface water pollution 2. Groundwater pollution is a tough task to handle 3. Implementation of national environmental quality standards 4. Incentives should be given to industrial sector in form of subsidies and tax relaxation against the installation of waste water treatment plants 5. Impose fine on the polluter pay plenty rule J. Adopting more crop per drop technologies for agriculture 1. Laser levelling 2. Drip irrigation 3. Sprinklers can help to minimize water wastage at farm level K. Positive awareness L. Agro-climating zoning should be preferred instead of provincial boundaries for water resources M. Mainstreaming environmental change concerns 1. Eco-framework conservation 2. Proper administration and use of water N. Construction of Reservoirs on emergency basis: Diamer-Basha, Kalabagh Dam O. Revamping the system of water rights P. Strengthening the role of IRSA Q. Disseminate awareness regarding the rising stress on water resources R. Raising height of existing dams to increase capacity S. using advanced technology e.g. drip framing for water conservation T. Building national consensus on water sustainability via constitutional amendment U. using wireless sensor network/ telemetry system as a central database to monitor water consumption/ flow yearly

VII. Conclusion

Water crisis in pakistan (most expected essay for css exams 2019-2020).

About the author

dilemma of water and energy crisis in pakistan essay

Saeed Wazir

Saeed Wazir mentors students of CSS Essay, Précis and Current Affairs and specializes in English literature, language and linguistics from NUML. He has perused Media studies at NUST. He qualified PMS three times in a row. He serves at federal universities as marking instructor. He has been mentoring CSS English students for the last seven years and runs Facebook page: CSS Essay, Précis with Saeed Wazir. He is based in G 9/2 ,Islamabad and runs special batches of CSS Essay Précis both On-Campus and Online. He could be reached at csspms55@gmail. com and WhatsApp plus Phone no 03450997822. He contributes to CSS Times, Daily Times, Dawn, Foreign Policy and IPRI. He evaluates Online Essays, Précis and Comprehension.

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Pakistan Energy Crisis; Causes, Consequences and Solutions

January 20, 2023
Pakistan Energy Crisis; Causes ...

Table of Contents

Pakistan has been facing an energy crisis for several years. The main causes of the crisis include a lack of investment in new power generation capacity, outdated and inefficient power plants, and inadequate transmission and distribution infrastructure. Additionally, the country has long struggled with issues of energy theft and non-payment of bills by consumers.

The crisis has led to frequent power outages, which have negatively impacted economic growth and the daily lives of citizens. The government has taken steps to address the crisis, such as investing in new power generation projects and implementing policies to reduce energy theft, but more work needs to be done to fully resolve the issue.

Causes of Energy Crisis in Pakistan

The energy crisis in Pakistan is caused by a combination of factors, including:

Insufficient power generation capacity: Pakistan has not invested enough in new power generation projects, leading to a shortage of electricity.
Inefficient power plants: A large portion of Pakistan’s power generation capacity is from old and inefficient power plants, which consume more fuel and produce less electricity.
Transmission and distribution losses: The transmission and distribution infrastructure in Pakistan is inadequate and outdated, leading to significant losses of electricity during transmission and distribution.
Power theft and non-payment of bills: Power theft is a major problem in Pakistan, as is the non-payment of bills by consumers. This leads to a financial crisis for power companies, which then struggle to generate enough revenue to maintain and expand their operations.
Fuel shortages: Pakistan has been facing fuel shortages for power generation, which leads to power outages and load shedding.
Dependence on oil-based power generation: Pakistan is highly dependent on oil-based power generation, which makes it vulnerable to fluctuations in global oil prices.
Water scarcity: Pakistan has been facing water scarcity which leads to the non-availability of water to run hydro-power stations at full capacity.
Political instability: Political instability and lack of continuity in policies have led to the neglect of power projects and lack of investment.

Overall, resolving the energy crisis in Pakistan will require a combination of short-term solutions, such as increasing power generation capacity and reducing transmission and distribution losses, as well as longer-term solutions, such as investing in renewable energy sources and improving the overall efficiency of the power sector.

Consequences of Energy Crisis in Pakistan

The energy crisis in Pakistan has had a number of negative consequences for the country and its citizens:

Economic damage: The energy crisis has had a significant negative impact on Pakistan’s economy. Businesses have been forced to close or scale back operations due to power outages, and the lack of reliable electricity has made it difficult for industries to operate at full capacity.
Reduced quality of life: Power outages have caused inconvenience and hardship for citizens, particularly during the hot summer months. Inadequate access to electricity has also made it difficult for people to access basic services such as education and healthcare.
Increased poverty: The energy crisis has contributed to increased poverty in Pakistan, as many people have lost their jobs or seen their incomes reduced due to power outages and the resulting economic damage.
Environmental damage: The energy crisis has led to increased use of fossil fuels and wood-burning for power generation, which has contributed to air and water pollution and deforestation.
Reduced foreign investment: The energy crisis has led to reduced foreign investment in Pakistan, as investors are deterred by the lack of reliable electricity and other infrastructure.
Loss of competitiveness: Pakistan’s energy crisis has led to increased production costs, which has resulted in reduced competitiveness in international markets.
Political instability: The energy crisis has led to social unrest and protests against the government.
Dependence on imports: Pakistan’s energy crisis has led to increased dependence on imported energy, which has strained the country’s balance of payments and further weakened its economy.

Overall, the energy crisis in Pakistan has had a wide-reaching and negative impact on the country’s economy and society, and resolving the crisis will be crucial for achieving long-term economic growth and development.

Solutions of the Energy Crisis in Pakistan

There are a number of potential solutions to the energy crisis in Pakistan, including:

Increasing power generation capacity: Pakistan needs to invest in new power generation projects, such as building new power plants and expanding existing ones, in order to increase the country’s overall power generation capacity.
Developing renewable energy sources: Pakistan should invest in renewable energy sources such as solar and wind power to reduce its dependence on fossil fuels and to lower its greenhouse gas emissions.
Improving the efficiency of power plants: Pakistan should invest in upgrading its existing power plants to increase their efficiency and reduce the amount of fuel they consume.
Upgrading transmission and distribution infrastructure: Pakistan should improve its transmission and distribution infrastructure to reduce losses of electricity during transmission and distribution, which will improve the overall efficiency of the power sector.
Reducing power theft and non-payment of bills: The government should implement policies and measures to reduce power theft and improve bill collection to make the power sector financially stable.
Increasing water storage: Pakistan should invest in increasing water storage capacity, so that water can be stored during the monsoon season and used to generate power during the dry season.
Improving energy conservation: Pakistan should invest in energy conservation measures, such as promoting energy-efficient appliances and buildings, to reduce the overall demand for electricity.
Diversifying energy mix: To reduce dependence on oil-based power generation and to decrease the impact of fluctuation of oil prices, the government should invest in diversifying the energy mix to include coal, hydro, nuclear, and renewable energy.
Improving governance: The government should work on improving governance by promoting transparency and accountability in the power sector and ensuring continuity in policies.

Implementing these solutions will require significant investment, political will and strong governance. Additionally, it will take time to see the results and to fully resolve the energy crisis in Pakistan.

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Issue Brief on “The Growing Water Scarcity Issue in Pakistan”

Water scarcity is the foremost critical issue that Pakistan faces today. The country is the most water-stressed among the South Asian countries and will face acute scarcity by 2025. [1] The effect of the water crisis in Pakistan is already being felt among people. Almost 30 million Pakistanis have no access to clean water, 80 percent of people living in 24 major cities do not have access to clean water and 16 million slum dwellers of Karachi do not have access to running water. [2]

Water security is, rightly, linked to human rights, with the right to access clean water considered the basic human right of every citizen. However, due to growing population, reckless use of water along with changes in weather patterns because of global warming, countries around the world, both wealthy and poor, face increasing water scarcity in the 21st century. The UN reports that globally three billion people are facing water shortage with one billion facing hunger today. Moreover, the Global Risks Report of the World Economic Forum ranked water crises as the third most important global risk in terms of impact on humanity. [3]

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The Nation: Dealing with Pakistan’s growing water insecurity

Water insecurity is already imposing significant social, environmental, and economic development challenges for pakistan..

Water insecurity is already imposing significant social, environmental, and economic development challenges for Pakistan. In recent years, climate-induced disasters (floods and droughts) have highlighted the urgency to introduce climate-resilient solutions for improved water governance at all levels. In 1980, Pakistan had a relatively abundant supply of water. In 2000, Pakistan had become water-stressed and by 2035, Pakistan is predicted to have become water scarce. In addition, COVID-19 has underscored the importance of strengthening the resilience of potable water supply systems. Thus, Pakistan’s increasing water scarcity and vulnerability to climate change highlights the urgent need to manage climate-related risks and to improve water use at the national and local levels. Presently, groundwater provides over 90% of drinking water supplies to all major cities, including Rawalpindi and Islamabad Capital Territory, often referred to as the “twin cities.”

Read the full article on https://nation.com.pk

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Energy Crisis In Pakistan And Its Possible Solutions, Causes and Effects

Pakistan continues to go through an energy crises which has only become more severe from time to time. It is not just slowing down the economy but making life hell for the majority of the citizens. The energy needs of Pakistan are around 15,000 to 20000 MW per day, however currently it is creating only around 11,500 MW, rendering a shortage of 4000 to 9000 MW per day. With time, situation may have improved with the inauguration of many new projects and power plants, however the overall problem remains the same. Here are some of the causes, effects, and solution to the energy crises faced by Pakistan:

Causes: • Inefficient Power Plants: Part of the reason, shortfall exists is inefficient and outdated power plants that are unable to generate electricity that meets the national demand. Moreover, due to cash crunch the plants are unable to operate at the optimum capacity, since they don’t have enough funds to buy the necessary amount of furnace oil.

• Electricity Theft: Electricity theft can be termed as the mother of all evils causing the energy crises. The inefficiencies of the transmission and distribution system, cause this theft to take place, increasing the cost of supplying electricity. Instead of curbing this, the supply companies simply shift the burden of cost to the paying customers. A staggering Rs12.35bn worth of losses were reported owing to electricity theft in the Punjab area, whereas Rs16.5bn in Sindh contributing to a total of Rs59.174b throughout Pakistan.

• Lack of Dams: Currently, the bulk of electricity being supplied comes from the hydroelectric plants and IPPs, both of whom heavily depend upon the availability of water in the dams. Therefore, whenever the water levels drop low, so does the electricity’s supply. Pakistan’s failure to construct a major dam after Tarbellawhich was in the seventies, has greatly exacerbated the problem. Just a few months ago, the water management authority – WAPDA announced that water capacity had fallen to 30%.

Effects: • Public Unrest: Prolonged outages of electricity as well as gas result in public unrest on a mass level creating chaos. This chaos then manifests itself into citizens coming out on streets and disturbing the law and order situation. Many such incidents have occurred, where outraged citizens caused loss of property as well as halting the economic activity. Moreover, many times students are unable to study for their exams, forcing them to hire Essay Writer Services online for their assigned assignments.

• Economic Loss: The capacity utilization which pertains to how much energy is utilized for production in factories, falls down to alarmingly low levels due to lack of energy, interruptions in supply. This renders Pakistan unable to export the surplus materials, forcing the country to import instead, resulting in the depletion of the foreign exchange reserves. Moreover, the Independent Power Plants, that require exorbitant sums to create energy for the purpose of attenuating the shortfall, are also draining the resources of the country since they are operated by foreign companies. In the long run, this hampering of economic growth results in a low GDP.

• Poverty: The closure of industry caused by energy failures results in the subsequent unemployment leading to high levels of poverty.In a country where already 30% of the population is living below the poverty line, this leads to further worsening of situation.

Solutions: • Building more Dams: It is high time that Pakistan invests in the construction of more dams, since the electricity demand is increasing every year and the current capacity of the dams is not enough in fulfilling that demand.

• Investing in Renewable Energy: Only renewable energy can provide sustained, clean, pollution free and environment friendly electricity, which includes hydro power, wind energy, solar energy and tidal energy. Due to the advantages offered by renewable energy which includes low cost, the world has made great strides in shifting from conventional to renewable energy. However, Pakistan continues to heavily rely on furnace oil to produce electricity.

• Curbing Electricity Theft: Electricity theft is the biggest impediment in the uninterrupted supply of electricity. Unless the government introduces large scale measures to curb this problem, by introducing strict penalties for the culprits, and getting them implemented, it will continue to be one of the major reasons contributing towards the energy crises. Such measures on the government’s part are the need of the day.

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Water Crisis in Pakistan!

Water is essential to life on Earth, yet our planet is suffering a serious water crisis. Water scarcity has become an international crisis affecting millions of people around the globe and contributing to climate change, urbanization and unsustainable water management practices – including Pakistan. Amid all this turmoil is Pakistan where its own unique water crisis exists.

Rapidly rising global population:

One of the main factors contributing to our current water crisis is an ever-increasing global population . As this figure rises, so too does demand for water, needed for drinking, cooking, cleaning, and agriculture purposes. With growing populations comes increasing demands on already limited freshwater resources resulting in water scarcity across many regions.

Climate change: Another significant contributor to the water crisis, climate change has altered weather patterns with less predictable rainfall patterns and an increase in droughts and floods, further diminishing availability of water in dry and semi-arid regions with limited resources.

Urbanization and industrialization:

Water consumption by humans has also contributed significantly to the global water crisis. As more people move to cities, their demand for water increases, straining resources. Furthermore, industrial activities require large volumes of freshwater which results in overuse and depletion of freshwater sources.

Unsustainable water management strategies:

Over-extraction of groundwater, pollution of water sources. And ineffective irrigation techniques all play a part in creating the current water crisis. Such practices depleted freshwater reserves making it more challenging to meet growing demands for freshwater supplies.

Access to Clean Water is limited:

The water crisis has severe repercussions for human health, agriculture and the environment. Due to limited access to clean water and sanitation facilities. Waterborne diseases like cholera, typhoid and dysentery spread quickly through populations without access. Furthermore, agriculture – an industry which heavily consumes water resources – is particularly hard hit. Crops fail to flourish which create food shortages while farmers struggle for survival in an unforgiving landscape.

The water crisis also has environmental ramifications:

Depletion of freshwater resources leads to degradation of ecosystems and the loss of biodiversity. While impacting their functioning rivers, lakes, and wetlands that provide essential ecological services. Such as purifying drinking water supplies, controlling flood waters, providing flood control measures, or serving as habitat for aquatic species.

To address the water crisis:

There is an urgent need for a coordinated and integrated response. That takes into account all the contributing factors of this problem, including promoting water conservation and efficiency. Investing in infrastructure projects that facilitate sustainable management practices, adopting sustainable water management practices, and encouraging renewable energy sources. This may require measures such as increasing conservation efforts, investing in infrastructure investments, adopting sustainable water management practices and encouraging renewable energy production to address this complex situation.

Water conservation and efficiency measures:

Environmental water conservation involves both minimizing wastage and optimizing its use, through measures such as fixing leaky pipes, using more efficient appliances, and encouraging water-saving behavior. Investment in infrastructure such as dams, canals, or reservoirs may provide storage and distribution solutions in times of drought.

Sustainable water management practices:

At its core, water management involves balancing demand and supply, protecting sources from pollution, and encouraging more water-efficient irrigation techniques. Renewable energy sources like solar or wind power may help decrease carbon footprint of water supply systems.

Water crisis is an international challenge:

The water crisis is an impending global threat that requires immediate attention. It stems from multiple factors including population growth, climate change, urbanization and unsustainable water management practices. Addressing the water crisis requires a multidisciplinary and holistic strategy including conservation/efficiency initiatives, infrastructure investments and renewable energy promotion; only together can we overcome it and ensure its sustainable future for all.

Pakistan: Water crisis and Pakistan

Pakistan is among the countries most affected by the water crisis. Being predominantly arid and semi-arid with limited water resources. And with population growth fuelling increased demand for water sources; climate change resulting in unpredictable rainfall leading to droughts and floods only compounding this situation further.

Agriculture Sector in Pakistan: The agriculture sector accounts for over 90 per cent of total water usage. Unfortunately, inefficient irrigation techniques such as flood irrigation have resulted in significant wastage of water resources. And have resulted in the depletion of aquifers leading to decreased availability.

Implications of water crisis:

Pakistan’s water crisis has had far-reaching repercussions for human health, agriculture and the environment. A lack of access to clean water and sanitation facilities has resulted in waterborne diseases like cholera, typhoid and dysentery sweeping through. Water scarcity also threatens agriculture which relies heavily on freshwater supplies. Leading to crop failures and food shortages while depletion of freshwater sources has degraded ecosystems and reduced biodiversity levels significantly.

How can Pakistan address its water shortage issue?

There is an urgent need for an integrated approach that encompasses water conservation and efficiency initiatives, investing in infrastructure development projects, adopting sustainable water management practices and encouraging renewable energy sources.

Promoting water conservation and efficiency measures, such as using efficient irrigation techniques, can reduce water waste. Investing in infrastructure such as dams, canals, and reservoirs can aid with water storage and distribution during periods of drought. Adopting sustainable management practices such as groundwater recharge can replenish aquifers to ensure sustainable usage of groundwater resources while encouraging renewable energy sources such as solar-powered pumps can help lower carbon footprint of supply systems.

Pakistan has taken several measures to address its water crisis:

Such as the National Water Policy of 2018 which seeks to ensure sustainable use of water resources. Furthermore, the government has initiated various water management projects, such as building the Diamer-Bhasha dam which increases storage capacity while simultaneously increasing hydropower generation capacity.

Urgent action must be taken immediately to combat Pakistan’s water crisis:

Pakistan faces a critical water crisis that requires urgent action from all levels of government. This issue stems from multiple factors, including population growth, climate change and unsustainable water management practices. Addressing it effectively will require taking multiple approaches such as conserving and efficiently using water resources; investing in infrastructure; adopting sustainable management practices and using renewable energy sources for renewable power production; prioritizing water issues to secure sustainable future for all Pakistanis.

Impact of Pakistan’s Water crisis:

Pakistan’s current water crisis has had serious repercussions, which include:

Agriculture: Pakistan’s economy relies heavily on its agriculture sector for food security and rising prices, yet due to the water crisis this sector has been severely hit. Crop failures and reduced yields have caused food insecurity as prices skyrocket.

Human Health: Lack of access to clean water and sanitation facilities has caused an outbreak of water-borne diseases like cholera, typhoid, and dysentery – making their prevalence an important public health risk.

Environment: Toxic chemicals from agricultural runoff have polluted freshwater resources and degraded ecosystems, leading to loss of biodiversity and reduced ecosystem services.

Energy: Pakistan’s energy sector relies heavily on hydropower generation, but has been seriously compromised by the water crisis. Less water availability has resulted in reduced hydropower generation leading to power shortages and an increase reliance on fossil fuels for generation of power.

Socio-Economic: The water crisis has contributed to increased poverty, inequality and social unrest – particularly in rural areas where agriculture provides primary employment. Competition over water resources has caused conflict which subsequently escalates social tensions further.

Overall, Pakistan’s water crisis has had an immense negative effect on socio-economic development, public health, and the environment. Addressing it requires prompt action and a comprehensive strategy encompassing water conservation/efficiency promotion/investing in infrastructure/sustainable water management practices/promote renewable energy sources/ etc.

Conclusion: mes The global water crisis affects many countries, including Pakistan. Pakistan stands out in this respect due to its arid and semi-arid climate as well as rapidly growing population. Pakistan is facing a water crisis with devastating impacts for agriculture, human health, the environment, energy consumption and socio-economic development – urgent action are required immediately to mitigate them. Addressing Pakistan’s water crisis requires taking an integrative approach that encompasses conservation and efficiency measures, investing in infrastructure improvements, adopting sustainable management practices and encouraging renewable energy use. While the government of Pakistan has made steps towards solving its crisis, more needs to be done as an international community if we hope for a brighter future for all.

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The Causes and Consequences of Energy Crisis in Pakistan and Its Solutions

Fahad Farooq
December 15, 2023
CSS Essays , CSS Solved Essays

CSS & PMS Solved Essays | The Causes and Consequences of Energy Crisis in Pakistan and Its Solutions

Fahad Farooq , a Sir Syed Kazim Ali student, has attempted the CSS & PMS essay “The Causes and Consequences of Energy Crisis in Pakistan and Its Solutions” on the given pattern, which Sir Syed Kazim Ali teaches his students. Sir Syed Kazim Ali has been Pakistan’s top English writing and CSS, PMS essay and precis coach with the highest success rate of his students. The essay is uploaded to help other competitive aspirants learn and practice essay writing techniques and patterns to qualify for the essay paper.

1- Introduction 2- Energy crisis in Pakistan: A critical overview

3 – What are the causes of the energy crisis in Pakistan?

Evidence: Pakistan’s economic conditions constrain the construction of power generation plants.
Evidence: Lack of policy formulation and implementation due to the unstable political environment
Evidence: Inadequate transmission and distribution system and overloaded transformers, Report of special committee, Senate of Pakistan 2018
Case in Point: According to a report published by NEPRA 2018, Pakistan’s energy sector currently has about 25% transmission and distribution losses.
✓ Corruption and power theft
Case in Point: Pakistan is ranked 117th among 180 countries in the Corruption Perception Index, 2018 by Transparency International.
Evidence: Kalabagh Dam has not been completed due to inter-provincial conflicts.
Case in Point: Water disputes in Pakistan with India and Afghanistan affect Pakistan’s power sector.
Case in Point: In 2010, a severe flood severely damaged Pakistan’s power sector.
Evidence: Reliance on thermal power plants instead of hydel power plants has significantly increased its average cost.

3- What are the impacts of the energy crisis in Pakistan?

Evidence: Pakistan is suffering from 5 to 12 hours of load shedding per day, which affects the daily routines of students and employees.
Evidence: Due to high reliance on thermal fuel, circular debt and subsidies provided to the energy sector have increased.
Evidence: The energy crisis has made the lives of common people miserable.
Evidence: The unemployment ratio is increasing daily, which is giving birth to other social crimes.
Evidence: The industrial sector has to cut down its production due to prolonged load shedding and rising electricity bills.
Evidence: Due to the extreme energy crisis, foreign direct investment in the industrial sector has decreased.
Evidence: Pakistan has been suffering severe deforestation due to high reliance on thermal sources for power generation
Evidence: The energy crisis has caused extreme angst among the public, resulting in severe demonstrations against the government.

4- What are the pragmatic measures to overcome the energy crisis in Pakistan?

✓ To improve governance and effective implementation of policies
✓ To improve the efficiency of power plants and gradation of transmission infrastructure
✓ To formulate strict laws to control power theft
✓ To utilize renewable sources of energy for power generation instead of fossil fuels
✓ To generate electric power from nuclear power plants
✓ To build new dams for water storage and settle down inter-provincial conflicts

5- Critical Analysis 6- Conclusion

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The energy sector of a country is the foundation of its socio-economic development. Thus, energy security has remained, and still is, the agenda of many developed country’s schemes. However, in developing countries like Pakistan, the energy crisis due to a shortage of energy is the talk of every day. Pakistan has faced operational, managerial, and technical issues in the energy sector for the last two decades. The country has to overcome the crisis to attain socio-economic development in all sectors of society. Bad governance and inadequate planning by incompetent political leaders are the major causes behind the crisis. In addition, electricity losses in transmission lines and consumer power theft significantly burden the country’s economy. This energy shortfall has affected the country’s industrial, agricultural, and economic sectors. As a result, the unemployment, poverty, and social crimes in the society have increased. However, there is nothing in the world that cannot be solved. Pakistan should formulate strict laws and thoroughly implement them to control power theft. Updating the transmission and distribution structure to reduce power losses is essential. Moreover, the government needs to create awareness among the public to use energy-efficient products. In a nutshell, Pakistan’s socio-economic stability is impossible without addressing the issues responsible for the country’s energy crisis. This essay discusses the causes and impacts of Pakistan’s energy crisis and the pragmatic measures to curb the issue.

Currently, Pakistan is suffering from an acute energy crisis. Approximately twenty per cent of the country’s population needs access to electricity. But it does not produce enough energy to meet the demand. There is an electricity shortfall of approximately 8000 megawatts per day; as a result, the population has been facing the haunting effects of load shedding for five to twelve hours per day. This situation reflects the incapability of the previous governments to curb the issue and a need for more implementation of formulated policies in the power sector.

Since every issue has a cause, Pakistan’s poor economic condition is the primary cause of its energy crisis. Huge investments are required to lay the foundation of power projects to attain energy security in the country. Unfortunately, Pakistan has been suffering the worst economic crisis since its inception, due to which the power sector has been neglected. In addition, Pakistan has been facing political instability for decades. According to the Global Economy Watchdog for Political Stability, Pakistan is ranked 192 among 195 countries . In such unstable circumstances, no solid and visionary policy has been formulated to enhance the country’s power generation capacity. As a result, the country’s power sector is facing an acute crisis.

Moreover, most of the projects being used for electricity production are outdated. Due to poor maintenance, these plants operate at an efficiency level much lower than the designed capacity. They consume more fuel and produce less energy; as a result, they tend to increase the circular debt, creating a burden on the federal budget through subsidies. These soaring subsidies have adversely affected the financial health of the economy.

Furthermore, the high loss of electricity in the transmission and distribution system is a significant burden on the country’s energy resources. According to a report published by NEPRA 2018, Pakistan currently has about 25% T&D losses.

Apart from wasting energy, these losses go without payment to the power generation companies, which the government compensates through subsidies. So, these T&D losses significantly drain the country’s economy.

Additionally, corruption in the energy sector and consumer power theft are other significant contributors to the country’s energy crisis. A lack of technology-assisted techniques for stopping power theft has further devastated the situation. Transparency International has ranked Pakistan 117th among 180 countries in the Corruption Perception Index, 2018. Over time, several corruption scandals have been exposed in the power sector, severely affecting its growth and resulting in a high loss to national expenses. In this way, corruption and power theft significantly escalate the country’s energy crisis.

Similarly, inter-provincial conflicts on water sharing in Pakistan have hampered the development of Pakistan’s power sector. Small provinces blame the large ones for not giving their share in water resources. This mistrust has destroyed the understanding among the provinces to cope with the energy crisis. Due to these conflicts, the development of new power stations like the Kalabagh dam could not be possible. Furthermore, Pakistan has also indulged in a water war with its neighbours, India and Afghanistan. Now, India has started building dams on western rivers, and Afghanistan has begun building dams on the Kabul River, which has caused a water shortage for power generation in Pakistan. This has severely affected Pakistan’s power sector.

Another cause of the energy crisis in Pakistan is climate change. Due the phenomenon, heavy rainfalls are becoming very common, which cause floods. These floods damage the country’s electrical power sector every year. For example, the severe flood of 2010 severely damaged Pakistan’s power sector. Due to the lack of dams, this excess water from floods cannot be stored for valuable purposes. Thus, extreme weather patterns due to climate change also contribute to Pakistan’s energy sector disaster.

Lastly, shifting from hydel power plants to thermal power plants has proved another massive drain on the country’s power resources. More reliance on furnace oil to run power plants has made the country more vulnerable to the fluctuation of international oil prices. The current Russia-Ukraine conflict has exposed the vulnerability of various nations, including Pakistan, to oil and gas to meet their energy requirements. In this way, the soaring oil prices in the international markets are badly affecting Pakistan’s energy.

As every crisis comes with some aftereffects, load shedding is considered its most significant effect. This has affected all sectors of society. Due to this, students cannot fully concentrate on their studies, and public and private sector employees need more time in their work. Due to the non-availability of uninterrupted electricity, factories have shifted to other resources like furnace oil and natural gas, resulting in increased production costs. As a result, thousands of employees across the country have been expelled from their jobs. In this way, continuous load shedding has increased the poverty in society.

Due to the lack of solid and versatile policies of the incumbent political leadership, the dependence of power generation on thermal sources instead of hydel energy has increased. This high reliance on thermal fuel has resulted in increased circular debt. The outdated and deteriorated infrastructure of power plants, accompanied by high transmission and distribution losses, has created a massive gap between the supply and demand of electricity. Power plants are consuming more fuel and producing less energy. Moreover, insufficient recovery of bills from consumers has created a massive gap in the costs of generation and payment of recoveries. Instead of increasing the power prices, the government has increased the subsidies provided to the power generation companies. Thus, the energy crisis has significantly burdened the federal budget through subsidies.

The power crisis has made life hell for the majority of the citizens. Frequent load shedding has contributed to the increased unemployment in society. This unpredictable load shedding has caused extreme angst and distress among the public; as a result, various social evils like robbery and street crimes have increased in society. The condition of the youth of the country is especially miserable.

Similarly, the energy crisis has severely affected the industrial and agricultural sectors. They have to cut down their production and lay off thousands of workforce. Factories face early shutdowns, and the employees wait hours to resume work. Consequently, the net output of the industrial sector has decreased. This has resulted in increased prices of fertilizers, pesticides, and other ingredients in the agricultural industry. Moreover, being a water-scarce country, Pakistan’s agricultural sector is highly dependent on the power sector to use underground water for agriculture. Due to frequent shutdowns of electricity and high furnace oil prices, farmers face massive agrarian losses.

Due to the energy crisis, Pakistan is less likely to attract foreign direct investments in industrial sectors. There is a continuous decline in the existing number of industries in Pakistan. Maximum industries have been shifted to foreign countries, where cheap and reliable energy supply is available. Thus, the energy crisis in Pakistan has raised the cost of production.

Pakistan is highly dependent on thermal power plants and has been facing severe deforestation. Due to an unfortunate controversy among the provinces, Pakistan lacks hydel power projects. Besides this, the massive dependency on fossil fuels for electricity production has led to several environmental hazards, such as the emission of GHGs, global warming, and irregular weather patterns. Global warming has been the cause of severe floods in Pakistan for the last two decades, which has badly affected the domestic lives of ordinary people.

The long and often unpredictable hours of load shedding have caused extreme angst among the public, resulting in severe demonstrations against the government. Unfortunately, Pakistan is ranked 192 among 195 countries by the Global economy watchdog for political stability. Due to this political instability, there has yet to be continuance in the formulated policies to overcome the energy crisis in the country.

Every issue has a solution. First, the government should formulate solid laws and thoroughly implement them nationwide. There should be no political involvement in the power sector. The government should mainstream the issue of the energy crisis in the national narrative and try to develop a national consensus on this issue.

Furthermore, the government should focus on increasing the installed power generation capacity. Research centres should be established for prime solutions to power sector problems. The efficiency of the transmission and distribution system should be increased on a priority basis. The government should encourage the distributed generation to reduce transmission and distribution losses.

In addition, technology-assisted techniques must be used to stop power theft. The power sector cannot remain sustainable unless the service cost is fully recovered. The provincial governments and law enforcement agencies should assist the federal government in controlling power theft and the excessive losses in the transmission and distribution system.

Additionally, the country needs to shift from fossil fuels to renewable energy resources for electricity production like wind, hydel, and solar power projects to reduce environmental pollution and resolve the current energy crisis. Pakistan is enriched in hydro-power resources with the potential of 50000 megawatts, which is still untapped. The government should speed up the construction of hydel projects like the Diamer Bhasha Dam and other big projects like Dasu. The country should adopt renewable resources like wind and solar power as soon as possible to shift the trend from fossil fuel generation towards renewable generation.

Moreover, Pakistan should immediately enhance its nuclear power generation as it is cheap and reliable. Pakistan is 6th atomic power in the world but generates only a tiny amount of electrical power from nuclear sources. This will decrease the country’s dependency on foreign technology and imported fuels.

Lastly, being a water-scarce country, Pakistan needs to build more dams to store excess water in the monsoon season and use it in the dry season to run the power plants. For this purpose, the government should immediately settle the inter-provincial conflicts on major power projects, like the Kala Bagh Dam, to include bulk power generation into the national grid and avoid floods. Pakistan should negotiate with India and Afghanistan on critical water disputes as Pakistan’s power sector is highly dependent on the water received from these countries.

The energy sector of Pakistan has been facing an acute crisis for the last two decades due to incumbent political leadership, lack of formulation of solid policies and other technical issues. The situation has hampered Pakistan’s socio-economic development. With a dwindling economy and soaring political instability, the country needs immediate pragmatic steps to curb the issue for the smooth running of all the state’s sectors. If this issue is not resolved on a priority basis, the situation will become worse. In conclusion, the prolonged energy crisis has devastated the national economy. It has slowed down the industrial sector and affected all life sectors. It has caused inflation, unemployment, and poverty in the society. It has also damaged Pakistan’s international image. Multiple reasons behind the crisis, like poor governance, outdated power plants, transmission and distribution losses, power theft, inter-provincial conflicts on water resources and high dependency on thermal sources, need an immediate response from the government. And the adoption of renewable technologies can tackle the issue of outdated plants, reducing power losses, and implementing effective policies.

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Power crisis worsens in Pakistan amid severe heat wave

May 30, 2024 May 30, 2024 4:46 am GMT

Islamabad , May 29 (EFE).- Pakistan is facing an increased power crisis amid an ongoing heat wave that has gripped most parts of the country with temperatures nearing record high, officials said Wednesday.

The South Asian nation's electricity demand stood at around 25,000 megawatts (MW), compared to generation of 20,000 MW, creating a shortfall of over 5,000 MW.

Mehfooz Bhatti , an official at the power division of the Ministry of Energy , told EFE.

Due to the shortfall, people are experiencing load shedding for up to 10 to 12 hours everyday in rural areas and four to five hours in urban areas, according to local broadcaster ARY TV.

Unannounced power outages for hours have plagued the country, prompting people to protest against the prolonged electricity outages.

Frustrated residents took to the streets and entered a grid station in Peshawar over the weekend, demanding the power be switched on.

Demonstrators also blocked the main highway connecting Peshawar to capital Islamabad for hours.

Fazal Elahi , a provincial lawmaker from Khyber Pakhtunkhwa who was leading the protest, said that he would take control of the power button at the grid station if power was not restored.

Electricity was finally restored after local authorities held talks with the protesters.

Shehbaz Sharif directed authorities to minimize load shedding amid the ongoing heatwave, his office said in a statement.

The PM, while chairing a meeting on power situation, was briefed that the load shedding was occurring in areas where power theft rate is high, said the statement.

"The situation of [power] load management in extreme heat should be improved, keeping the convenience of the public in view," Sharif was quoted as saying.

The prime minister said those engaging in power theft should be dealt with strictly and this unlawful practice should be completely eliminated.

The government headed by Sharif has recently launched a campaign to curb power theft in the country to avoid huge financial losses.

The heat wave has especially affected Sindh and south Punjab provinces, with temperatures rising to 51 degrees Celsius in Mohenjo Daro, a town in Sindh known for archaeological sites dating back to the Indus Valley Civilization built in 2,500 BC.

Temperature in the town soared to 53 degree Celsius on Monday, as per Pakistan Meteorological Department (PMD).

The highest temperature the country has ever recorded was 54 degrees in the city of Turbat of Balochistan province in 2017, according to PMD.

The weather department has predicted the heat wave to subside by the end of the month but another spell is expected to hit different regions in Sindh and Punjab in June. EFE

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1 0000000404811396 https://isni.org/isni/0000000404811396 International Monetary Fund

Following the 2022 energy crisis, this paper investigates whether Europe’s ongoing efforts to cut greenhouse gas emissions can also enhance its energy security. The global computational general equilibrium model analysis finds that individual policy tools, including carbon pricing, energy efficiency standards, and accelerated permitting procedures for renewables, tend to improve energy security. Compared to carbon pricing, sector-specific regulations deliver larger energy security gains and spread those more evenly across countries, benefitting also some fossil-fuel-intensive economies in Central and Eastern Europe. This finding strengthens the case for a broad climate policy package, which can both achieve Europe’s emissions-reduction goals and deliver sizeable energy security co-benefits. An illustrative package, which would cut emissions in the EU, UK, and EFTA by 55 percent with respect to 1990 levels by 2030, is estimated to improve the two energy security metrics used in this paper by close to 8 percent already by 2030. Beyond the policies analyzed in the model, the paper also discusses the technology, market design, and supply chain reforms that Europe needs for an energy-secure green transition.

Executive Summary

Russia’s invasion of Ukraine in 2022 sparked an energy crisis in Europe. As shown in this paper, this crisis came on the back of a broad-based deterioration in energy security in previous decades, as the continent came to rely increasingly on imported energy from ever fewer suppliers. Following the war, policymakers have taken an impressive array of individual and collective actions to strengthen energy security. The main question this paper addresses is whether strengthening efforts to mitigate climate change will also support Europe’s energy security in the medium term. It examines two dimensions of energy security: security of supply, which improves as dependence on energy imports falls and/or imports become more diversified, and economic resilience to energy shocks, which is enhanced when the overall weight of energy spending in GDP declines.

The global general equilibrium model-based analysis in this paper finds that Europe’s climate change mitigation and energy security goals are largely complementary. Greenhouse gas emissions reduction policies tend to lower the risk of foreign supply disruptions by reducing reliance on imported energy and diversifying the remaining imports among non-European suppliers. They also tend to improve European economies’ resilience to energy shocks. This holds true particularly for those policies that directly curtail energy demand, such as sector-specific emissions and energy efficiency standards for cars and buildings. But even carbon pricing, which by its very nature raises energy prices, ends up lowering the amount spent on energy in most of Europe because energy demand is relatively elastic over the medium term.

However, Europe’s energy security gains from climate change mitigation vary across policy tools and countries. If used as a standalone tool, carbon pricing cuts emissions at least economic cost but can weaken energy security for a while in some energy- and emissions-intensive economies in Eastern Europe, partly due to accelerated phasing out of domestic coal. Sector-specific regulations deliver larger energy security benefits and spread those more evenly across countries. Public investment in heat pumps enhances security of supply by reducing fossil fuel imports, but it needs to be combined with an expansion of carbon-neutral power generation as it could otherwise raise electricity and gas prices and thereby the weight of energy spending in GDP.

These findings strengthen the case for a broad climate policy package, which can both achieve Europe’s emissions reduction goals at a low economic cost and yield sizable energy security co-benefits. Carbon pricing should remain at the forefront of this effort given its economic efficiency benefits, while sector-specific regulations and accelerated permitting procedures for green infrastructure will amplify the package’s energy security benefits and spread them more evenly across different European countries. An illustrative package that would cut emissions in the European Union, the United Kingdom, and countries of the European Free Trade Association by 55 percent with respect to 1990 levels by 2030 could improve the continent’s two energy security metrics studied in this paper by close to 8 percent by the same horizon.

The simulations also support the case for strong multilateral cooperation within Europe, given that countries differ in their degree of emissions or energy intensity, potential for renewable power generation, and financing costs. In particular, expanding common financial capacity for green investment at the EU level could accelerate the green transition by ensuring that its energy security co-benefits are more evenly shared across countries.

Further policies are needed. To boost investment in renewables and address their intermittency, European countries need to further improve electricity market design and support the deployment of technologies like batteries, green hydrogen, and those that enable demand-side flexibility. To avoid carbon lock-in, Europe needs to guard against overinvestment in fossil fuel infrastructure. Finally, deeper cooperation with other regions of the world can help secure supplies of minerals critical for the green transition.

1. Introduction

In 2022, Europe 1 suffered its worst energy crisis since the 1970s, triggered by Russia’s war against Ukraine. Pipeline gas flows from Russia to Europe began dropping in the second half of 2021 and flows to many countries were suspended in 2022 ( Di Bella and others 2022 ; Lan, Sher, and Zhou 2022 ). Prices of natural gas traded on the Dutch Title Transfer Facility increased over 20-fold between 2019 and August 2022, sending electricity prices up from €45 to €598 per megawatt hour in August 2022. Governments responded decisively, buying gas, providing financing to energy firms, requiring operators to fill gas storage facilities, leasing foating gas import terminals, and activating standby electricity generation capacity. Nevertheless, the energy crisis had first-order adverse economic impacts. Higher energy prices and calls for voluntary energy savings reduced consumption of gas by 15 to 20 percent, and that of electricity and coal by 5 to 10 percent ( Figure 1 , panel 1). Large industrial consumers bore most of the burden of gas demand reduction ( IMF 2023a ; Ruhnau and others 2023 ), which weighed on industrial production ( Chiacchio and others 2023 ). The war and its associated trade restrictions led the IMF to revise down its forecasts for GDP growth by over 1 percent in 2022 and 2023, and ½ percent in 2024 ( Figure 1 , panel 2). These downward revisions were even larger for energy-insecure European economies.

Despite the impressive array of measures taken in response to the war, Europe’s energy insecurity remains high, calling for further action. Indeed, markets expect energy prices in Europe to remain about 60 percent above prewar levels. 2 As the analysis in this paper shows, even before the war, Europe’s energy security had deteriorated over several decades along two dimensions: (1) the continent became more exposed to foreign energy supply disruptions, as imports accounted for a growing share of overall energy consumption, and those imports became increasingly concentrated among fewer foreign suppliers; and (2) the European economy became slightly more sensitive to energy shocks in general, as the ratio of energy expenditures to GDP rose. Further, the projections presented in the following show that the war itself is likely to have ambiguous effects on Europe’s energy security; on the one hand, it could reduce Europe’s exposure to foreign energy supply disruptions, but on the other hand, it could make European economies more sensitive to any such disruptions due to the persistent rise in energy prices from the war.

The key question this paper addresses is whether, and if so to what extent, greenhouse gas (GHG) emissions reduction policies could enhance Europe’s energy security, over and above contributing to Europe’s ambitious climate change mitigation agenda. The European Union’s REPowerEU package, for example, proposed raising the European Union’s 2030 renewable energy target from 32 to 45 percent and its energy efficiency target from 9 to 13 percent. 3 Most importantly, both the European Union and the United Kingdom have legally binding emission reduction targets, which involve cutting GHG emissions by 55 and 68 percent of 1990 levels by 2030, respectively, before reaching climate neutrality by 2050. At the EU level, the so-called Fit for 55 package of policy proposals shows which policy actions could be taken to achieve the 2030 targets. Fit for 55 includes carbon pricing, sector-specific regulations on energy efficiency, legal measures to speed up the deployment of renewable power generation, and financial support. There remains little comprehensive evidence regarding the energy security implications of Europe’s emissions reduction policies, both individually and as a package; this paper aims to fill this gap.

Europe’s Energy Crisis Severely Affected Energy Consumption and the Economy

Citation: Departmental Papers 2024, 005; 10.5089/9798400265655.087.A001

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The impact of climate change mitigation policies on energy security is not straightforward a priori and likely to vary across European countries, calling for a quantitative assessment. On the one hand, promoting the deployment of renewable energy, which tends to be produced domestically, could reduce Europe’s dependence on energy imports, including imports from unreliable suppliers ( Jewell, Charp, and Riahi 2014 ; Kim, Panton, and Schwerhof 2024 ). Likewise, enhancing energy efficiency (for cars and buildings, for example) should help energy security by reducing energy demand for a given level of domestic supply. On the other hand, various mitigation policies, especially carbon pricing, increase the cost of energy; thus, if energy demand is not responsive enough-more specifically, if its price elasticity is less than one, the overall weight of energy spending in GDP may rise, increasing the economy’s exposure to energy shocks. Furthermore, higher carbon prices would be expected to speed up the phasing out of coal, a highly polluting yet rather safe source of energy for those European countries that still produce it. A related concern could be that many pathways to climate neutrality will rely for a while on natural gas, global production of which is concentrated in fewer global suppliers than other fuels (I EA 2007; Kim, Panton, and Schwerhof 2024 ); there are also more infrastructure constraints associated with natural gas.

This paper assesses the impact of climate change mitigation policy actions on European countries’ energy security by means of a global multicountry, multisector general equilibrium model. The model describes energy trade, consumption, and production patterns for each country over the medium term and how they relate to GHG emissions. The model is used here to simulate the impact of individual policy tools, such as higher carbon prices, tighter emission and performance standards for road transport and buildings, faster permitting procedures for renewables or public investment in heat pumps, as well as climate policy packages such as one that resembles the European Union’s Fit for 55 agenda. Energy (in)security is analyzed here along the two dimensions mentioned earlier: (1) the risk of foreign energy supply disruptions and (2) the exposure of economic activity to any energy supply disruption.

The key findings from the simulations are the following:

▪ Climate change mitigation policies are expected to help Europe’s energy security in the medium term. Higher carbon prices, tighter sector-specific energy efficiency regulations, and accelerated permitting would all improve Europe’s energy security along the two dimensions considered in this paper.

▪ The energy security gains from climate change mitigation policies vary across policy tools and countries. If used as a standalone tool, carbon pricing cuts emissions at least cost but can weaken energy security for a while in some energy- and emission-intensive economies in Central and Eastern Europe, partly due to accelerated phasing out of domestically produced coal. Sector-specific energy efficiency regulations, while economically costlier than carbon pricing, deliver larger energy security co-benefits and spread those more evenly across countries. This is primarily because such regulations lower both the price and the consumption of energy, while carbon pricing only reduces the latter. Public investment in heat pumps enhances security of supply by reducing fossil fuel import dependence, but it needs to be combined with policies to decarbonize the power sector as it could otherwise raise gas and electricity prices and thereby the weight of energy spending in GDP.

▪ A broad package of measures can deliver sizable energy security gains for Europe. Such a package would combine both the economic efficiency of carbon pricing and the larger and more evenly shared energy security benefits of sector-specific regulations. Specifically, a package (1) lowers dependence on imported energy, because renewable energy is produced domestically while Europe’s fossil fuel consumption tends to be imported; (2) diversifies energy imports away from non-European suppliers, as Norway’s share rises while top non-European energy producers reallocate their exports away from Europe as its energy demand falls; (3) lowers energy expenditures, as energy efficiency investments reduce energy demand and accelerated renewables deployment raises energy supply, both of which help lower energy prices; and (iv) by decarbonizing the power sector, ensures that public investment in heat pumps—which could otherwise raise gas demand—enhances energy security.

▪ An illustrative package that would cut emissions by 55 percent vis-à-vis 1990 levels by 2030, and would be close in spirit to the envisaged climate policy mixes in the European Union, the United Kingdom, or countries of the European Free Trade Association (EFTA), is estimated to improve the two energy security metrics by close to 8 percent by 2030. This would reverse 13 years of deterioration in the European Union’s economic resilience, and 8 years of deterioration in the European Union’s security of supply.

The remainder of this paper proceeds as follows. The next section presents the energy security metrics used in this paper and shows their evolution for Europe before the war. The following section provides a brief overview of the model and discusses the calibration and results of baseline scenarios that investigate the effects of the war. The two subsequent sections present the simulation results for individual climate policy actions and a broad climate policy package, respectively. They are followed by a discussion of the policy implications from these model simulations. The annex goes beyond the policies analyzed in the model to explore, qualitatively, further policy actions Europe could take to achieve both its climate change mitigation and energy security goals. These include supporting technologies to address intermittency of renew-ables, making markets more efficient and attractive for renewables deployment, and securing the supply of minerals that are critical to the energy transition.

2. Europe’s Deteriorating Energy Security Before the War

Energy security is a multifaceted concept that can be measured in many possible ways. For example, Sovacool and Mukherjee (2011) list 320 indicators of energy security along five broad dimensions. To keep things focused, this paper measures energy security along two main dimensions: 4

▪ Security of supply , which is defined here in terms of the risk of foreign supply disruptions. The main metric used to capture this dimension is the composite energy supply insecurity index proposed by Cohen, Joutz, and Loungani (2011) , defined for each country as Σ sup p l i e r c o u n t r y i ( ( n e t p o s i t i v e e n e r g y i m p o r t s ) e n e r g y c o n s u m p t i o n ) 2

where the sum runs across all non-European supplier countries. Whereas Cohen, Joutz, and Loungani (2011) assign countries risk weights based on a political risk score, this paper takes a more agnostic approach and treats all non-European countries identically. European energy suppliers like Norway effectively get a risk weight of zero, which reflects that they are deeply integrated democracies that are less likely to restrict energy exports to each other. 5 This metric summarizes both energy import dependence (that is, the ratio of net energy imports to consumption) and the geographic concentration of energy imports (that is, Herfindahl index with European countries getting zero weight), which are two other commonly used metrics in the literature. Annex 1 shows that the composite index is approximately equal to a weighted average of the two. This dimension of energy security captures the reliability of foreign energy supply.

▪ Economic resilience , which is defined here in terms of the sensitivity of economic activity to any energy shock. It is measured as the ratio of energy consumption expenditures of firms and households to GDP, both expressed in current prices. This ratio is closely related to the well-known ratio in economics called the Domar weight ( Hulten 1978 ; Baqaee and Farhi 2019 ). It is also intuitive that economies with a high energy expenditure share be more vulnerable, all else equal. For example, upon impact, a 10 percent increase in energy prices would increase energy expenditures by 2 percentage points of GDP in an economy that starts out with an energy expenditure share of 20 percent of GDP, but only by 0.5 percentage point in an economy with an initial energy expenditure share of 5 percent. 6

Along these two dimensions, Europe’s energy security had deteriorated in the decades before Russia’s invasion of Ukraine. 7 In the European Union, the composite energy supply insecurity index increased fivefold between 1990 and 2019 ( Figure 2 , panel 1), while energy expenditures increased slightly from 5.5 percent of GDP in 1970 to 6.6 percent in 2019 ( Figure 2 , panel 2). These increases were broad-based: the composite insecurity index increased between 1990 and 2019 for 25 of the 29 European countries, and the energy expenditure shares increased in 17 out of 22 countries for which data are available. The large swings in energy expenditures were mostly driven by the evolution of international oil prices. The long-term downward trend in the United Kingdom reflects a 50 percent reduction in the economy’s energy intensity (measured as the ratio of real energy consumption to real GDP) since 1990 ( Figure 2 , panel 3).

Europe’s Energy Security Deteriorated in the Decades before Russia’s War in Ukraine

The main reason behind the deterioration of Europe’s security of supply since 1990 is that the continent came to rely more on imported energy to meet its consumption needs and its energy imports became more geographically concentrated ( Figure 3 ). The European Union’s energy import dependence increased from about 56 percent in 1990 to 76 percent in 2021, pushed up by gas, oil, and coal imports from Russia. Further, the (weighted) geographic concentration of its energy imports doubled over that same period. The opening of Nord Stream 1 played an important role for Germany, as the replacement of Norwegian gas with Russian gas between 2010 and 2015 contributed toward a 20 percent increase in the geographic concentration of its overall energy imports, which reversed improvements made in the prior decade. Most European countries (including notably Germany, Italy, and the United Kingdom) increased the (weighted) geographic concentration of their energy imports between 1990 and 2015. In France, the geographic concentration of energy imports remained stable over this period as energy imports from Russia substituted those from Saudi Arabia.

Europe Came to Rely More on Imported Energy from Fewer Suppliers—Primarily Russia

European Union: Contributions to Higher Concentration of Energy Imports in the Last Two Decades

(Percentage point change in Herfindahl index, 1999–2021)

The upward trend in the geographic concentration of energy imports in the European Union since 1999 is due to increasing concentrations of coal and oil imports ( Figure 4 ). This finding emerges from a simple shift-share analysis, which decomposes the increase in concentration into the contributions of (1) changes in the import concentration of each energy source and (2) changes in the energy import mix. In contrast to coal and oil, imports of other energy sources, like gas, did not become more concentrated over this period for the European Union as a whole—with a few such important exceptions as Germany. Meanwhile, changes in the energy mix contributed negligibly to the increase in concentration due to offsetting forces: the energy import mix shifted toward natural gas, whose import sources are highly concentrated among few foreign producers, but it also shifted away from coal and oil, whose import sources also tend to be fairly concentrated. In Italy, by contrast, changes in the energy mix played a more decisive role, as the shift into natural gas drove up geographic concentrations of energy imports, and hence the insecurity of supply index, between 1999 and 2021.

These indicators capture the two most important dimensions of energy security, but they ignore potential amplification effects from physical infrastructure constraints and price instability. They treat the geographic concentration of and expenditure on imported pipeline gas and oil symmetrically to seaborne imports, even though pipeline imports can be harder to substitute in the event of a disruption in a specific trading partner. The modeling in the following attempts to capture such infrastructure constraints by calibrating so-called iceberg trade costs. Energy price instability in Europe had also been a concern, rising in the two decades before the pandemic ( Figure 2 , panel 4). However, the price stability dimension of energy security cannot be captured in the analysis of this paper due to the model’s deterministic structure. Therefore, Annex 3 looks beyond the model, into the specific technologies (for example, hydrogen, batteries, and demand-side flexibility) Europe will need to maintain price stability as it adopts renewable energy, the supply of which varies intermittently with the weather.

3. The Mixed Effects of the War on Europe’s Medium-Term Energy Security

The impact of the war on Europe’s future energy security is not straightforward a priori. On the one hand, reduced energy dependence on Russia should help to reduce risks of potential future energy supply shocks. After the start of the war, the European Union phased out Russian coal and imposed sanctions on seaborne oil, which reduced its imports of Russian oil by 90 percent ( European Commission 2023b ). Russia’s share in EU gas imports also fell dramatically from 41 percent in 2021 to 15 percent in the first 10 months of 2023 ( European Commission 2023a ). Further, the European Union committed to phasing out all remaining Russian fossil fuel imports before 2030. 8 On the other hand, the war could persistently increase energy prices in Europe, which would weaken energy security by raising the energy spending share in GDP and thereby making economic activity more sensitive to any energy disruptions, all else equal.

To simulate the effects of the Ukraine war and various climate mitigation policies on European energy security, this paper uses a global multicountry, multisector general equilibrium model (called “ENVISAGE”), developed by the World Bank and adapted at the IMF. 9 This recursive dynamic computational general equilibrium model describes economic activity, energy trade and use, and GHG emissions for 31 countries or country groups, including 10 in Europe. 10 The model captures production, consumption, and trade in 28 commodities, including crude oil, oil products, gas, and coal. It also describes electricity generation from each fossil fuel, renewable (wind, solar, hydro), and nuclear source. The model is yearly, but this paper focuses on results for the year 2030 (the “medium term”), for which the model is the most reliable.

The effects of the war are estimated by comparing energy security metrics under prewar and postwar baseline scenarios:

▪ The prewar baseline (Baseline 1) is calibrated using estimates of energy trade from the International Energy Agency and projections of the electricity mix, GHG emissions, and economic activity from the EU Reference Scenario 2020 and the IMF’s January 2022 World Economic Outlook ( IMF 2022a ). The electricity mix in each country is calibrated by adjusting the productivities of each generation technology. The geographic concentration of Europe’s energy imports in the model is about 12 percent in 2021 and its energy expenditures are 6 percent in 2019, similar to those for the European Union in Figure 3 , panel 2, and Figure 2 , panel 2, respectively. However, due to differences in definitions, the model’s import dependence ratio is only about 54 percent in 2021, 22 percentage points below its level in the data. 11 This difference is taken into account when commenting on the results in the following.

▪ In the postwar baseline (Baseline 3), bilateral energy trade is adjusted to reflect the shutoff of Russian gas flows as observed in monthly data from Eurostat. For example, these data show that Germany reoriented its gas imports from 2021, when 65 percent of gas came from Russia, toward Norway, whose share of German gas imports increased from 19 percent to 60 percent, and such other countries as Belgium and The Netherlands. Other countries that saw a decline of more than 15 percent in Russian gas imports include Croatia, Estonia, Finland, Latvia, The Netherlands, Poland, Portugal, and Sweden. In the postwar baseline, Europe is assumed to phase out all remaining Russian fossil fuels by 2030. Economic activity is assumed to follow the April 2023 World Economic Outlook ( IMF 2023d ), while emissions and the electricity mix are allowed to respond endogenously.

▪ Finally, a hypothetical intermediate scenario (Baseline 2-labeled as such because it falls between Baselines 1 and 3) is used to disentangle the impact of the gas shutoffs from that of the European Union’s sanctions on Russia (and any other energy security effects of the war). In Baseline 2, gas imports are not adjusted, but European countries are assumed to continue phasing out Russian oil and coal.

The simulations suggest that Russia’s war in Ukraine and the associated trade restrictions will have mixed effects on Europe’s energy security in the medium term. The war is projected to cause Europe to import more of its energy from the United States ( Figure 5 , panel 1). France and Italy are projected to import more from Africa, while Germany, the Czech Republic/Slovak Republic/Hungary bloc, and Poland are projected to import more from Norway. The net effect is to reduce the geographic concentration of Europe’s energy imports among non-European suppliers by about two-thirds ( Annex Figure 2.1 , panel 2). Europe is projected to respond to the war-induced increase in energy prices by producing more energy, which reduces its energy import dependence ratio by 1.2 percentage points ( Annex Figure 2.1 , panel 1). This reduction in import dependence is also found in Rojas-Romagosa (forthcoming) . The decline in geographic concentration and import dependence together drive down the projected 2030 composite index of energy insecurity by some 8 percent in Europe as a whole ( Figure 5 , panel 2). However, despite rising European energy supply, energy prices remain higher in the postwar world (Baseline 3) than they would have been in a counterfactual no-war scenario (Baseline 1). As a result, and despite some reduction in energy consumption, European countries’ energy expenditures are projected to rise by about 0.2 percent of GDP overall ( Figure 5 , panel 3). 12

Effects of the War on Europe’s Energy Trade and Security in the Medium Term (2030)

Looking into the drivers of Europe’s enhanced security of supply, oil and coal sanctions on Russia appear to play a bigger role than the shutoffs of Russian gas, although both factors contribute positively. This can be inferred from the fact that the composite energy security index drops for most of Europe between Baseline 1 and Baseline 2, but does not change as much between Baseline 2 and Baseline 3. The model simulations suggest that oil and coal sanctions on Russia ultimately diversify Europe’s energy imports more across non-European suppliers than shutoffs of Russian gas do.

4. The Energy Security Effects of Different Climate Policy Tools

A. Calibration of Individual Instrument Scenarios

Having established that enhancing Europe’s energy security will remain a key priority following Russia’s war in Ukraine, this paper turns next to the question of whether climate policy tools could help enhance it. To this end, the following five illustrative individual policies are simulated one at a time, and their impacts on security of energy supply and economic resilience to energy shocks against the postwar baseline scenario (Baseline 3) are analyzed:

▪ Higher carbon prices in the EU and UK emissions trading systems (ETS) . These prices are assumed to rise more steeply over time, to end at €110 per ton in 2030 in the European Union instead of €33 as in the EU Reference Scenario (and these prices reach €118 in the United Kingdom). These higher prices reduce emissions by about 4 percent in 2030, compared to baseline. Further details on the calibration of each scenario are provided in Annex 3.

▪ Tighter emissions and energy performance standards for road transport and buildings . Energy efficiency in Europe’s transport services sector is increased so that its consumption is reduced by 13 percent compared to the baseline. To capture tighter regulations on buildings, energy efficiency improves in the “other services” sector (which includes real estate activity, the main economic sector that operates buildings) to reduce its energy consumption by 5 percent. Households, which contribute to both transport and buildings emissions, adjust their preferences to reduce their energy consumption by 8 percent. These reductions in energy demand are sufficient to reduce overall emissions by 4 percent in 2030, which matches the emissions reduction achieved by higher carbon prices, in order to facilitate comparisons.

▪ Accelerated renewables permitting processes . These would increase total factor productivity of wind and solar power, which encourages investment and leads to 10 percent more such generation compared to baseline by 2030. This 10 percent improvement is consistent with a 40 percent improvement in the speed of renewables deployment, as would arise if the median European country’s permitting times could match those of the country at the top quartile.

▪ Public investment in heat pumps in residential buildings . To simulate this policy, European households’ preferences are shifted away from energy, reducing their overall demand by 6 percent in both the EU and EFTA region and the United Kingdom, while within energy, households’ preferences shift away from coal and gas and toward electricity. These reductions in energy demand are sufficient to reduce emissions by 4 percent in 2030, which matches the emissions reduction achieved in the first two simulations listed above.

▪ Removing fossil fuel subsidies . Subsidies on fossil fuel production and consumption are phased out in this simulation, to varying degrees across countries and fuels depending on prewar estimates, drawing on data from Rademaekers and others (2020) . By calibrating 2030 subsidies according to prewar data, this analysis assumes that the temporary energy subsidies introduced during the energy crisis will be fully phased out before 2030. Although fossil fuel subsidies are small relative to GDP in most of Europe, they can be large relative to the consumption of specific fuels. Subsidies for coal production in Germany, for example, make up only 0.1 percent of GDP (or €3.6 billion) but 1.3 euros per gigajoule of domestic coal use, which is about 25 percent of the retail price ( Annex Figure 2.5 , panels 1 and 2).

One feature should be borne in mind when comparing the individual policy simulation results. The carbon pricing, road and building regulations, and heat pumps scenarios reduce emissions by similar amounts, meaning that their energy security effects can be readily compared. However, accelerated permitting and a removal of fossil fuel subsidies can only be expected to reduce emissions by smaller amounts. For renew-ables, this is because of the limit on how much accelerated permitting could speed up deployment. For fossil fuel subsidies, this is because they are expected to be too small in the medium term—after returning to their prewar levels—for their removal to have a large impact on Europe’s emissions.

In addition, the model simulations do not investigate two important related aspects of energy security. First, they do not explore the implications of the European Union’s Carbon Border Adjustment Mechanism for energy security. The Carbon Border Adjustment Mechanism’s direct effects are unlikely to be material, because the only energy products it covers are electricity, very little of which is imported, 13 and hydrogen, which is not included in the model due to uncertainty around how much of the energy mix it will contribute to in the future. Indeed, Makarov and others (2021) find negligible effects of the Carbon Border Adjustment Mechanism on the European Union’s fossil fuel imports. Second, the model simulations do not investigate the potential energy security implications of supply chain risks associated with the green transition. These could potentially affect the flow, albeit much less the stock, of renewables. Specifically, while imports of solar panels or wind turbines could expose importers to supply chain disruptions originating abroad, these would not be expected to have acute implications for energy consumption because installed solar and wind plants could continue operating. Policies to address critical mineral dependencies are explored in Annex 3.

B. Effects of Individual Instrument Scenarios

Climate change mitigation policies tend to enhance energy security in Europe along both the energy supply security and economic resilience dimensions. Figure 6 shows the effects of each policy instrument on the composite energy supply insecurity index (panel 1) and the energy expenditure share of GDP (panel 2). More detailed results on import dependence and geographic concentration are shown in Annex Figure 2.2 . Specifically:

▪ Higher carbon prices tend to make supplies more secure and economies more resilient to energy disruptions, except for a few energy- and emissions-intensive economies in Central and Eastern Europe. Carbon pricing causes substitution away from dirtier toward cleaner energy sources, and since Europe’s domestic energy production tends to be cleaner than its imported energy, its energy import dependence falls. In support of this intuition, economies where energy imports are dirtier than domestic production experience the largest reduction in import dependence in response to higher carbon prices ( Annex Figure 2.3 , panel 1). Poland and Czech Republic/Slovak Republic/Hungary as a group (which is a single bloc in the model) are the exceptions, where domestic energy production is more fossil-fuel-intensive than imports. At the same time, higher carbon prices reduce the geographic concentration of energy imports, mainly driven by lower shares of energy imports from the United States (and Africa, in the case of Italian imports), while the share of imports from Norway rises. Europe’s energy suppliers, such as the United States and African countries, have relatively geographically diversified energy exports, meaning that they can easily reallocate these toward other destinations when Europe reduces its demand. 14 Overall, higher carbon pricing tends to improve the composite energy insecurity index in most of Europe ( Figure 6 , panel 1). Similarly, higher carbon prices tend to reduce the ratio of energy expenditures to GDP, because energy demand over the medium term is relatively responsive to prices, especially in Western Europe. Exceptions are again found mostly in the energy-intensive economies of Central and Eastern Europe ( Annex Figure 2.3 , panel 3). In Poland, energy expenditures rise relative to GDP because the coal-intensive electricity mix is rather rigid in the model, although in reality, it might prove more responsive to higher carbon prices.

▪ Tighter regulations on energy efficiency in road transport and buildings cause larger improvements in energy security compared to higher carbon prices, and they share them more evenly across European regions. As demand for natural gas for heating purposes falls for given domestic natural gas production, and as demand for (mostly imported) oil falls with more fuel-efficient road transport services, the dependence of energy consumption on imports falls. In this scenario, Europe also reduces the geographic concentration of its imports, including as imports from the United States fall. Because of this reduction in import dependence and geographic concentration, tighter regulations improve the composite energy supply insecurity index in all European regions ( Figure 6 , panel 1). Furthermore, lower energy demand means less energy spending, as less energy is used and energy prices fall ( Figure 6 , panel 2). By reducing both energy consumption and energy prices, tighter energy efficiency regulations reduce energy expenditures even more than do carbon prices.

▪ Accelerated permitting for renewables also improves energy security in all European regions, even though its effects are smaller. By increasing the supply of domestically produced energy, it brings down energy prices and expands economic activity, thereby improving economies’ resilience to energy shocks ( Figure 6 , panel 2). Moreover, faster permitting reduces the risk of a disruption to foreign energy supplies, for two reasons. First, European energy importers replace their imports with domestically produced energy, particularly so in countries with greater wind and solar capacity to begin with ( Annex Figure 2.4 , panel 2). Second, faster permitting reduces the geographic concentration of energy imports, especially natural gas imports from the United States. Therefore, the composite energy supply insecurity index shows an improvement for all of Europe ( Figure 6 , panel 1).

▪ Public investment in heat pumps makes energy supply more secure but can raise energy costs if implemented in isolation. It leads to an expansion of electricity production, which replaces imported fossil fuels and hence reduces import dependency ratios. Demand for natural gas falls, especially from the United States, which tends to diversify energy imports in most of Europe. The latter effect is especially strong in the United Kingdom, because the United Kingdom is projected in 2030 both to import a high share of its energy from the United States and to have a high share of its gas consumption accounted for by households (44 percent). Therefore, the composite energy supply insecurity index improves for most European regions ( Figure 6 , panel 1). However, without a decarbonization of the power sector, energy expenditures rise relative to GDP ( Figure 6 , panel 2). This is because heat pumps increase demand for electricity, which in many countries drives up demand for gas from power plants. Since gas supply is rather inelastic, as evidenced by the challenges that Europe faced in increasing gas production during the 2022 energy crisis, this demand pushes up gas prices, and hence electricity prices. Rising energy costs are most noticeable in Poland, where the energy mix shifts from cheap gas (before heat pump investment) to more expensive electricity, and the Bulgaria/Croatia/Romania region, where the economy is relatively electricity-intensive and therefore energy expenditures are more sensitive to rising electricity prices.

▪ Removing fossil fuel subsidies has a negligible effect on energy security in most of Europe, given their small expected size by 2030, once the recent energy support measures taken in response to the war are fully phased out. The only two countries where they have a material impact are Germany and the United Kingdom, which tend to have the largest subsidies on fossil fuels relative to consumer expenditure thereon, reaching a tenth of the gas price in the United Kingdom and a quarter of the coal price in Germany ( Annex Figure 2.5 , panel 2). One important feature of European fossil fuel subsidies is that they tend to target production (50 percent of subsidies in the European Union) rather than consumption (35 percent), with the remainder targeting energy efficiency and research and development. As a result, while their removal slightly reduces GHG emissions (by 0.3 percent in the simulation) and benefits the economy, it causes domestic energy production to fall and energy import dependency to rise in Germany and the United Kingdom. 15 In addition, regardless of whether they are targeted at production or consumption, European fossil fuel subsidies tend to be skewed toward fuels that are produced domestically, like coal in Germany or gas in the United Kingdom. This means that, in the specific case of European economies, removing fossil fuel subsidies—even those to consumption—tends to raise the taxation of domestically produced energy even more than that of imported energy. Indeed, those European economies where fossil fuel subsidies are more skewed toward domestically produced energy products tend to experience a larger increase in import dependency when fossil fuel subsidies are removed ( Annex Figure 2.5 , panel 3).

Effects of Illustrative Individual Climate Policy Instruments on Energy Security

5. A Broad Policy Package

The varying emission reduction, economic efficiency, and energy security effects of different climate policy instruments strengthen the case for broad policy packages such as those currently being rolled out across Europe, including at the EU level. Carbon pricing is the economically efficient, least-cost way to meet ambitious GHG emission reduction goals. Sector-specific regulations, such as tighter emissions and energy efficiency standards for road transport and buildings, are not as cost-effective emission reduction tools, but they yield larger energy security gains that are also more widespread across countries. In particular, they also benefit energy- and emissions-intensive economies in Central and Eastern Europe. Finally, for investment in heat pumps to improve both dimensions of energy security, concomitant measures need to be taken to decarbonize the power sector, including accelerating permitting procedures for renewable power generation. Therefore, combining all these tools can simultaneously deliver on emission reduction, economic efficiency, and energy security objectives.

A. Calibrating a Broad Policy Package

To quantify the energy security effects of a broad set of climate change mitigation policies, an illustrative package is simulated. It is designed to capture the key features of climate change mitigation policies in the European Union, the United Kingdom, and EFTA, and targets an emissions reduction for Europe as a whole of 55 percent of 1990 levels by 2030. This level is in line with the emissions reduction targets in the European Union and Norway, but below the target in the United Kingdom and above that in Switzerland. The simulated package includes the following policies, which are in line with those examined in the preceding section, but typically set more ambitiously (see Annex 2 for details):

▪ Higher carbon prices in electricity and manufacturing sectors . Europe already has plans to increase its carbon prices over time, whether through the EU ETS, which also covers Norway and is linked to the Swiss ETS, or through the UK ETS, which covers similar sectors. Therefore, this component of the illustrative policy package assumes a steepening of these price paths. Carbon prices in the EU ETS, for example, are assumed to rise to €185 per ton in 2030 (rather than €33 in Baseline 1 and the EU Reference Scenario).

▪ Tighter energy and emissions efficiency standards in road transport and buildings . This element of the package captures Europe’s tighter fuel-efficiency standards for new cars, vans, buildings, and heating systems, as well as target shares of electric vehicles, which vary across countries. These are calibrated to reduce energy demand in 2030, compared to baseline, by 13 percent in the transport services sector, 8 percent in the “other private services” sector (which includes real estate services), and 15 percent in households. It is assumed that firms improve their energy efficiency while households prefer less energy.

▪ Accelerated permitting procedures for renewables . This element of the package reflects efforts by many European countries to address this key bottleneck to the deployment of renewables. It is calibrated to result in 10 percent more wind and solar power generation in 2030 than in the baseline, as in the preceding section on individual policy scenarios.

▪ Public investments in technologies like heat pumps that electrify households’ energy consumption and enhance their energy efficiency . Most national governments offer public support (for example, grants, tax rebates, or loans) for the purchase and installation of heat pumps and other renovations of residential buildings to enhance their energy efficiency. The European Union provides funding for residential building renovation too, in the form of coherence funds and the Recovery and Resilience Facility. The simulations approximate these policies through a further reduction in households’ energy demand by 11 percent and an increase in their electricity demand.

B. Climate and Energy Security Impacts

The simulation results confirm that (1) the package would enhance energy security by reducing by at least 8 percent the risk of a disruption to Europe’s foreign energy supply and the sensitivity of European economic activity to any energy disruptions, and (2) those gains would be widespread—even benefiting energy- and emission-intensive economies in Central and Eastern Europe, including the Bulgaria/Croatia/Romania and Czech Republic/Slovak Republic/Hungary regions. Specifically:

▪ Security of supply . The broad climate policy package reduces the composite energy supply insecurity index substantially for all European countries, except Poland, by 2030 ( Figure 7 , blue bars). The overall index for Europe drops by about 8 percent by 2030, reflecting underlying reductions in both import dependence and geographic concentration. As fossil fuel imports decline, dependence on imported energy falls in most of Europe, and by 0.6 percentage point overall ( Annex Figure 2.6 ). The only exceptions are Poland and the Czech Republic/Slovak Republic/Hungary region, which substitute imports for their domestic production of fossil fuel–intensive oil products (covered by the EU ETS) and coal, respectively. Europe also reduces the share of its imports coming from the United States and increases that coming from Norway, which reduces energy import concentration by some 7 percent overall and by as much as 25 percent in Germany ( Annex Figure 2.6 ). Italy lowers its concentration through reduced reliance on Africa, while the Czech Republic/ Slovak Republic/Hungary group lowers it through cuts in imports coming from Eurasian and Middle Eastern regions.

▪ Economic resilience . The broad climate policy package reduces Europe’s ratio of energy expenditures to GDP by 10 percent of its baseline level (or by 0.4 percentage point, from 4.7 to 4.3 percent), with all European energy importers benefiting ( Figure 7 ). The latter include energy-and emissions-intensive economies in Central and Eastern Europe, which gain from the energy efficiency investments driven by tighter road transport and buildings standards. In Norway, energy expenditures fall in nominal terms, but they rise relative to GDP because the economy becomes smaller as less energy needs to be produced domestically to export to the rest of Europe.

Poland stands out as the one country where the energy security benefits of a broad climate policy package are ambiguous: its energy spending share of GDP falls by 7 percent of its baseline level, but its composite energy supply insecurity index deteriorates by 5 percent. The latter reflects an increase in import dependence as domestically produced coal is phased out, with this effect outweighing the reduction in energy imports’ geographic concentration in the Cohen-Joutz-Loungani index. 16 This deterioration would be modest, especially considering that Poland starts from a strong third place in Europe along this (security of supply) dimension in the postwar baseline and would remain a solid fourth under the broad policy package. Nonetheless, these results emphasize the importance of ramping up domestic electricity generation as coal is phased out. For example, the government’s plan to increase the supply of renewables and/ or nuclear energy could be helpful in this regard, as it would help replace domestically produced coal without increasing import dependence ( IMF 2023c ; Krogulski 2023 ). Poland’s energy security could also be enhanced by expanding electricity interconnections with neighboring countries, which would increase imports of renewable electricity from safe European suppliers and thereby reduce risks from import dependence (European countries receive zero weight under the Cohen-Joutz-Loungani index used in this paper, unlike non-European countries; see Annex 1). For example, Poland could raise its 2030 interconnection target to 15 percent of electricity production, in line with the European Union’s target. More broadly, deeper integration of electricity markets would improve energy security throughout Europe, as suggested by further model simulations ( Box 1 ).

A Broad Climate Policy Package Would Enhance Energy Security

(Percent deviation from postwar baseline, unless indicated otherwise)

These simulation results complement those of Kim, Panton, and Schwerhof (2024) , who find that the world could enhance its energy security by raising carbon prices. In their analysis, higher global—rather than just European—carbon prices could increase the geographic concentration of energy exports and imports by lowering global fossil fuel prices and thereby driving high-cost producers out of the market, but this effect would be dominated by reduced reliance on imported energy (an effect also found in Jewell, Charp, and Riahi 2014 ). The broad European policy package simulated here does not affect global fossil fuel demand enough to affect materially global fossil fuel prices, implying that high-cost suppliers are not driven out of the market and thereby amplifying the energy security gains from Europe’s climate action.

C. Overinvestment in Fossil Fuels

As it ramps up its climate policy action, Europe must guard against persistent overinvestment in public fossil fuel infrastructure along the green transition path—a material risk, according to the analysis in this paper. For example, simulations of the climate policy package in this paper suggest that Europe is broadly on track regarding its investments in climate-neutral power generation but is overinvesting in fossil fuels. Specifically, Europe’s fossil fuel capital stock in 2030 is projected to be almost 20 percent larger than implied by the broad climate policy scenario that achieves a 55 percent emission cut. This cumulative overinvestment even reaches almost 40 percent for fossil fuel power generation (versus 15 percent in fossil fuel extraction). New investments in natural gas infrastructure can help maintain adequate supply of a bridging source of energy that will be phased out gradually by 2050 and provides a buffer against unforeseen disruptions. However, the 20 percent overinvestment figure coming out of the simulations points to the need for reexamining some of these projects.

To alleviate such risks of “carbon lock-in,” Europe needs to exercise close regulatory oversight of fossil fuel investment plans, which are developed by industry associations with an informational advantage and an incentive to overstate investment needs. To date, this oversight seems inadequate—for example, most countries’ national energy plans as of 2023 did not assess whether there could be overinvestment in oil infrastructure ( European Commission 2023a ). It is thus welcome that the Agency for the Cooperation of Energy Regulators (2023a) noted that the European Network of Transmission System Operators for Gas’ proposed investments in gas infrastructure, at €110 billion in its plans from 2022, were “likely to exceed reasonable needs for such infrastructure, considering the expected reduction in gas demand in Europe from 2030.” To combat overinvestment in natural gas infrastructure, policymakers could require that new gas infrastructure be “hydrogen-ready” (as in Germany) and provide appropriate definitions and regulations that govern the certification of this term. It is also essential to ensure that any government tax incentives for investment in coal or oil production or distribution be rapidly phased out.

Simulating a Closer Energy Union through Electricity Market Integration

Deeper integration of electricity markets in Europe, captured in the model by reduced trade costs, would increase electricity trade between European countries. The illustrative simulations, under which cross-border electricity trade increases by 50 percent, suggest that this integration would improve energy security along the two dimensions (security of supply and economic resilience) considered in this paper:

▪ Security of supply . Even though more electricity trade would increase import dependence, it would reduce the geographic concentration of energy imports among non-European suppliers. The net effect would be to reduce exposure to foreign supply disruptions in most of Europe, as measured by the composite energy supply insecurity index ( Box Figure 1.1 , panel 1).

▪ Economic resilience . Economies become less sensitive to energy supply disruptions because energy prices and hence energy expenditures fall ( Box Figure 1.1 , panel 1). The fall in electricity prices tends to be greater in economies that have higher electricity prices in the baseline (Italy, United Kingdom), because these have the most to gain from cheaper electricity imports as electricity market integration equalizes electricity prices across Europe ( Box Figure 1.1 , panel 2).

While a closer energy union enhances Europe’s energy security, the simulations suggest that it has negligible effects on its greenhouse gas emissions, as would be expected. With electricity production shifting to more competitive economies like Germany and the Belgium/The Netherlands region, where electricity prices are lower in the baseline, emissions increase there by 0.3 percent, but fall symmetrically in other economies such as Italy (by 0.4 percent).

The Energy Security Impacts of Deeper Electricity Market Integration

(Deviation from baseline, percent unless indicated otherwise)

6. Conclusions and Policy Implications

The green transition requires a transformation of Europe’s energy system. As this paper shows, this transition also provides a unique opportunity to enhance Europe’s energy security after the recent energy crisis and decades of neglect. Ambitious climate policy action across Europe mitigates two fundamental sources of energy insecurity: the risk of foreign supply disruptions, by reducing reliance on imported energy and by diversifying energy supplies geographically among non-European suppliers; and the overall weight of energy expenditures in the economy, by curtailing energy demand. A broad policy package that would cut emissions by 55 percent vis-à-vis 1990 levels at the 2030 horizon by combining multiple instruments, including carbon pricing and sector-specific regulations, could enhance Europe’s energy security along these two metrics by some 8 percent. It would also spread those gains widely across the continent.

In combining different instruments to meet their emission reduction objectives, European policymakers will face some partial trade-of between minimizing the economic costs and maximizing the energy security gains from their climate policy packages. In some cases, the choice will be straightforward; for example, the very small energy security gains from some fossil fuel subsidies cannot justify their adverse emission, economic, and distributive effects, all of which call for their removal. But in general, for a given reduction in GHG emissions, policymakers who put more weight on economic efficiency would make heavier use of carbon pricing, while those who are relatively more concerned about energy security would rely comparatively more on sector-specific emission and energy efficiency regulations. Such a trade-of also provides a rationale for the coexistence of multiple instruments and targets, over and above an overall emission reduction objective. For example, the European Union’s 2030 renewables and energy efficiency targets, and any future revisions of these as new emission reduction goals are set for 2040, can help the European Union achieve its preferred combination of economic efficiency and energy security along its decarbonization path. 17

The heterogenous energy security gains from climate action across countries also highlights the need for greater multilateral cooperation on energy in Europe. In particular, deeper integration of European electricity markets would improve energy security across the continent by diversifying energy imports from non-European suppliers and reducing energy prices ( Box 1 ). In the European Union, this means pursuing the Energy Union. The European Union has achieved some successes in electricity market integration, especially in the coupling of the day-ahead electricity markets—by allowing prices in every market and cross-border trades to be simultaneously determined, it ensures that more interconnection capacity is used to send electricity from low- to high-price zones, reducing cross-country differentials in wholesale electricity prices. However, further progress is needed to connect electricity grids between EU member states. For example, seven of them do not yet meet the European Union’s target of having sufficient cross-border capacity to export 15 percent of their electricity production to neighboring countries ( European Commission 2023b ).

More broadly, energy policies, which remain a predominantly national rather than EU-level competency, could be better coordinated. Most member states, for example, still need to set targets to measure progress toward the European Union’s energy import diversification objectives. Furthermore, power capacity mechanisms—which provide financial compensation for power plants to be available for generating electricity when needed—differ from country to country ( Roques 2021 ). Steps toward harmonizing and integrating these mechanisms across countries would help minimize the associated market distortions. Such steps could include standardizing the reliability criteria—which gauge the ability of the power system to deliver as needed through foreseeable and unforeseeable events—across countries, developing common methodologies for “resource adequacy assessments,” and establishing rules for dealing with electricity shortages in two neighboring countries.

Multilateral cooperation could also be strengthened through joint financing arrangements, which could abate European emissions at minimum cost while spreading the economic and energy security gains from climate policy action more evenly. An EU-level fund for energy security and climate could help fund projects to decarbonize private capital, like buildings, and develop new technology, both of which are key yet might otherwise remain underfunded due to low domestic returns or allocated inefficiently across member states. Such a fund has been proposed, for example, by Arnold and others (2022) and Abraham, O’Connell, and Arruga Oleaga (2023) . The model simulations in this paper suggest that energy- and emissions-intensive economies in Central and Eastern Europe enjoy smaller energy security co-benefits from climate change mitigation action, and also happen to have lower marginal abatement costs of GHG emissions in many cases. By supporting investments in these economies, an EU-level fund could enhance their energy security and economic gains from climate action while accelerating Europe’s green transition at low cost, thereby also benefiting the Western European countries that might be net contributors to such a fund.

Annex 1. The Composite Energy Insecurity Index

This annex shows that the composite energy insecurity index of Cohen, Joutz, and Loungani (2011) is approximately equal to the weighted average of two other commonly used energy insecurity indicators: energy import dependence and the geographic concentration of energy imports.

The composite energy insecurity index is defined for a given importing country in a given year as

where the summation runs across each non-European energy supplier i , and net positive energy imports denotes imports net of exports if these are positive, otherwise zero. This definition is equivalent to that proposed in Cohen, Joutz, and Loungani (2011) , except that, while those authors use a political risk index taken from the International Country Risk Guide, the definition here assigns zero risk to European countries and equal (unit) risk weight to all non-European supplier countries. The rationale for this choice of weighting scheme is explained in the main text.

The reason that this index can be considered as a combination of import dependence and geographic concentration is that it can be written equivalently as

where total net positive energy imports is defined as the sum (across non-European supplier countries i ) of net positive energy imports. The first ratio within the round brackets is similar to import dependence (although imports from European countries get zero weight), which is then squared, and the term in square brackets is similar to the (risk-weighted) Herfindahl index of geographic import concentration (assigning European countries zero risk and non-European countries an equal unit risk weight). One key distinction should be highlighted here: the first term in round brackets gives zero weight to imports from European countries, whereas the rest of this paper shows the standard import dependence ratio, which does not differentiate between European and non-European imports.

In other words, the composite index is approximately equal to

(import dependence) 2 [geographic import concentration].

Therefore, the cube root of the composite index is approximately equal to

(import dependence) 2/3 [geographic import concentration] 1/3 ,

which shows that the (cube root of the) composite index is approximately equal to a weighted (geometric) average of import dependence and geographic import concentration, with a weight of two-thirds placed on import dependence and one-third on geographic import concentration.

The approximation will be better for countries that are net energy importers (because then net positive energy imports are similar to net energy imports), especially those who are net energy importers with respect to each trading partner. Conversely, the approximation might be worse for energy exporters or for countries that are heavily engaged in energy re-export activity (that is, importing energy from one supplier country and then re-exporting it to other consumer countries).

Annex 2. Further Calibration Details and Simulation Results

This annex provides further details on the calibration of each scenario and their simulated energy security impacts. To save space, it is not self-contained and should be read jointly with the main text.

A. Calibrating the Effects of the War

Three baseline scenarios are used in this analysis, as defined in the main text. Energy intensity and productivity of power generation technologies are the same in all baseline scenarios. All electricity and non-energy trade in the prewar baseline (Baseline 1) is calibrated to match the Global Trade Analysis Project database version 11. All historical and projected economic variables have been averaged to the regional country groupings in the model using purchasing-power-parity GDP-weighted averages. The economy is assumed to be on a steady state growth path after 2027, meaning that GDP continues growing at its 2027 rate and current account balances are maintained at 2027 levels. The second baseline scenario (Baseline 2) assumes no change to natural gas trade, but European countries phase out Russian oil and coal by 2030. Economic variables follow their projections in the IMF’s April 2022 World Economic Outlook ( IMF 2022b ), which reflect the impact of the war and European sanctions on Russia but do not assume any shutoff of Russian gas supplies to Europe.

The postwar baseline scenario (Baseline 3) adds the Russian gas shutoff to Europe to Baseline 2, which therefore accounts for all developments so far associated with the war. Given that Eurostat’s annual bilateral energy trade data for 2022 and 2023 were not yet available at the time of this analysis, the geographic distribution of natural gas imports (that is, “import shares”) after the Russian gas shutoffs had to be estimated using the available monthly bilateral gas trade data up to June 2023. The annual gas import shares in 2022 were assumed to match those in 2021 for most countries, except for those where the available monthly data show a significant change in Russian gas imports. A significant change was defined here to be a 15 percent reduction in Russian gas imports between 2022:Q4 and the average for the fourth quarters of 2017–21. According to this definition, the following countries saw material declines in their Russian gas imports in the monthly data: Croatia, Estonia, Finland, Germany, Latvia, The Netherlands, North Macedonia, Poland, Portugal, and Sweden, as well as the European Union as a whole. For these affected countries, the immediate postwar gas imports from Russia are estimated by adjusting down the imports from 2021 (from the annual data) by the percentage change in the bilateral gas imports from Russia between 2022:Q4 and the average for the fourth quarters of 2017–21. In Baseline 3, economic variables follow their projections in the IMF’s April 2023 World Economic Outlook ( IMF 2023d ), which account for Russian gas shutoffs. Furthermore, GHG emissions and electricity mix in Baseline 3 are allowed to vary endogenously in response to the shocks of the war, which means that they are not calibrated and therefore differ from those assumed in Baseline 1.

The evolution of energy security under these different baseline scenarios is discussed in the main text. Annex Figure 2.1 shows the model’s simulated effects of the war on energy import dependence and geographic import energy import concentration under the three baseline scenarios in 2030. The war leads to a reduction of energy import dependence in all of Europe, compared to the prewar baseline, whereas it reduces the geographic concentration for all European regions except Italy and France.

The War Tended to Reduce the Risk from Abroad of Disruptions to Europe’s Energy Supply in the Medium Term

B. Calibrating Different Climate Policies

This subsection provides further calibration details and impacts on energy import dependence and geographic energy import concentration of the individual climate policy scenarios.

Higher Carbon Prices on Current ETS Sectors

This scenario simulates the impact of higher carbon prices on power generation and industry, which are the main sectors currently included in the EU and UK ETS. Carbon prices are raised so that the EU/EFTA region and the United Kingdom each achieve emissions reductions of 4 percent. Carbon pricing revenue is assumed to be returned to households in the form of labor tax reductions, so the carbon pricing schemes are fiscally neutral.

The results of this scenario simulation are discussed in the main text, but Annex Figure 2.2 shows the impacts on import dependence and geographic concentration. Energy import dependence tends to fall because Europe’s domestic energy production tends to be cleaner than its imported energy, meaning that higher carbon prices cause substitution toward domestic energy sources. These effects are stronger in countries with dirtier energy imports relative to domestic energy production ( Annex Figure 2.3 , panel 1). At the same time, higher carbon prices diversify Europe’s energy imports geographically across non-European suppliers ( Annex Figure 2.2 , panel 2), mainly driven by lower shares of energy imports from the United States (and Africa, in the case of Italian imports). These diversification effects are stronger for countries whose suppliers are less locked in to supplying Europe ( Annex Figure 2.3 , panel 2).

Tightened Energy and Emissions Efficiency Standards for Road Transport and Buildings

Emission reductions resulting from tighter standards are modeled as a technological improvement in energy efficiency, which is associated with an annual cost in the form of forced investment that does not add to the production potential of the economy. To calibrate the overall cost, which ends up being 2.8 percent of gross fixed investment per year between 2023 and 2030, the key assumption is that transport emissions fall by 8 percent relative to baseline and buildings emissions fall by 5 percent, in both the EU/EFTA region and the United Kingdom. (Together, these are sufficient to add up to a 4 percent reduction of overall emissions in both the EU/EFTA region and the United Kingdom.) In turn, these emissions reductions are calibrated to cost 0.6 percent of gross fixed investment in the case of road transport and 2.2 percent in the case of buildings, which add up to the 2.8 percent total cost. The costs for each sector are estimated as follows:

Effects of Individual Climate Policy Instruments on Europe’s Security of Supply

Determinants of the Effect of Carbon Pricing on Energy Security

▪ Road transport energy efficiency investments that reduce the sector’s emissions by 8 percent are assumed to cost about 0.6 percent of European fixed investment . Tighter regulations on road transport, which produce emissions reductions of 4 to 11 percent, would cost vehicle manufacturers €400 to €2,700 per vehicle ( European Commission 2017a ). Averaging across these ranges suggests that an emissions reduction of around 8 percent corresponds to an average cost to manufacturers of €1,550 per vehicle. This cost estimate is multiplied by an estimate of the number of newly registered vehicles in the European Union, the United Kingdom, and EFTA countries between 2023 and 2030. There were 14.5 million newly registered vehicles (12.7 million cars and 1.9 million trucks) in 2021, at which rate there would be 116 million newly registered vehicles between 2023 and 2030, yielding a cumulative cost of €180 billion, or 0.6 percent of the €3.5 trillion in gross fixed investment per year. The costs to consumers are assumed to be zero as the higher cost of more fuel-efficient vehicles is offset by the lower running costs associated with fuel efficiency.

▪ Buildings energy efficiency investments that reduce the sector’s emissions by 5 percent are assumed to cost about 2.2 percent of European fixed investment . Energy renovation projects in the European Union and United Kingdom between 2012 and 2016 reduced annual buildings emissions by 12 percent at a cumulative cost of €1,365 billion ( European Commission 2019 ). Therefore, scaling these numbers down linearly, a reduction of buildings emissions by 5 percent would require cumulative energy renovation investments (over the 2023–30 period) of about €570 billion in the European Union and United Kingdom, or about €610 billion in the European Union, the United Kingdom, and EFTA combined (scaling up by GDP), which is 2.2 percent of fixed investment per year. The large cost estimate here reflects the implicit assumption that no energy renovations would have taken place in the absence of a need for decarbonization, which is required due to a lack of data on counterfactual buildings investments. Therefore, the GDP impacts of this scenario are likely to be lower than simulated here.

To meet these emissions reduction goals, it is assumed that energy demand falls in road transport and buildings by 8 and 5 percent, respectively, relative to baseline, thus matching one-for-one the percentage decline in emissions. This one-for-one response of energy demand is supported by the simulations for vehicles in European Commission (2017b) . Furthermore, it is assumed that the “other private services” sector accounts for buildings emissions in the model, which means that this sector is calibrated to reduce its emissions and energy demand by 5 percent. (This assumption is supported by the fact that the services sector, including real estate services, owns the vast majority of the building capital stock, according to Organisation for Economic Co-operation and Development [OECD] data.) In the model, road transport emissions are generated by both the transport services sector and by households. In turn, it is assumed that energy demand and emissions fall by 13 percent relative to baseline in the transport services sector and by 8 percent in households. These reductions in energy demand are assumed in both the EU/EFTA region and the United Kingdom.

The simulation results suggest that tighter energy and emissions efficiency standards produce energy security co-benefits that are more evenly shared across European regions than in the case of carbon pricing. Specifically, as demand for natural gas for heating purposes falls, with no reduction in natural gas production, the dependence of energy consumption on imports falls ( Annex Figure 2.2 , panel 1). Geographic concentration of energy imports falls, driven by lower European energy imports from the United States ( Annex Figure 2.2 , panel 2).

Permitting Procedures Duration and Effects of Accelerating Them

Accelerated Permitting Procedures

This scenario assumes that permitting procedures for renewables are sped up by 40 percent in Europe, which means that the baseline path of development of renewable power generation capacity is achieved 40 percent sooner. The 40 percent potential speed-up is calculated as the average, across different renewable energy technologies (onshore wind, ground-mounted solar, and unspecified solar), of the percentage difference between the average European permitting duration and that of the country at the fastest 25th percentile of the sample, as shown in Annex Figure 2.4 , panel 1. For onshore wind for example, the average European country takes 5.6 years to process permitting applications, whereas Spain, the country at the fastest 25th percentile of the sample, takes just 3.4 years, which is 39 percent faster.

The simulations indicate that faster permitting reduces the risk of a disruption to foreign energy supplies, for two reasons. First, European energy importers replace their imports with domestically produced energy ( Annex Figure 2.2 , panel 1), with stronger effects in countries with more wind and solar capacity to begin with ( Annex Figure 2.4 , panel 2). Second, faster permitting reduces the geographic concentration of energy imports among non-European suppliers ( Annex Figure 2.2 , panel 2), driven especially by lower natural gas imports from the United States.

Public Investment in Residential Heat Pumps

This policy assumes that about 22 million heat pumps are installed in residential buildings in Europe. These heat pumps are calibrated to reduce households’ energy demand by 6 percent overall. This 6 percent reduction comes from assuming that about 8 percent of residential dwellings receive a heat pump, which cuts their gas consumption to zero and increases their electricity consumption by 20 percent of the energy that they were previously using in the form of gas. To achieve this 6 percent energy demand reduction, EU and EFTA households reduce their demand for coal and gas by 50 percent and increase their electricity demand by 15 percent, while UK households reduce their demand for coal and gas by 16 percent and increase their electricity demand by 7 percent. The cost for the whole of Europe is calibrated at €126 billion, or 0.4 percent of gross fixed investment per year between 2023 and 2030. This implies a cost per heat pump of €5,645. In turn, this number is the product of the average cost of space and water heating heat pumps from the EU Reference Scenario Technology Assumptions ( De Vita and others 2021 ), €784 per kilowatt, and the average capacity of a heat pump, 3.6 kilowatts, and then doubled to reflect the labor costs of installation.

The simulation results suggest that investment in heat pumps reduces the risk of a disruption to foreign energy supplies. To meet the higher demand for electricity, Europe expands its electricity production, which replaces imported fossil fuels and reduces import dependency ratios ( Annex Figure 2.2 , panel 1). Geographic concentrations of energy imports fall in most of Europe ( Annex Figure 2.2 , panel 2), driven by lower imports from the United States. The one exception here is the Czech Republic/Slovak Republic/ Hungary region, where household income gains cause oil imports to increase, and these imports are highly geographically concentrated (in other Eurasian countries).

Removal of Fossil Fuel Subsidies

One challenge faced by this study was the lack of timely and comprehensive data on fossil fuel subsidies (including tax exemptions) by European countries. The approach taken here was to calibrate fossil fuel subsidies for each country and fuel, and to distinguish between production and consumption subsidies, according to the data in Rademaekers and others (2020) , and for the United Kingdom, using data published by the OECD. The fossil fuel subsidies data apply to the year 2018, which means that this study assumes that these 2018-level subsidies are maintained in the baseline until 2030.

The OECD fossil fuel subsidies for France, Germany, and Italy do not differ systematically from the European Commission data. For example, the OECD data show higher fossil fuel subsidies than the European Commission data for Italy, but lower subsidies for Germany and France. This pattern suggests that the OECD data for the United Kingdom are sufficiently comparable with the European Commission data for other European countries.

These data provide nominal fossil fuel subsidies (that is, subsidies in euros) according to two different classifications. The first is by fossil fuel, breaking down subsidies into those directed at oil, gas, and coal. The second breakdown is by beneficiary, breaking down subsidies into those targeting energy consumption and those targeting energy production. Since the data do not provide a joint breakdown along these two dimensions, the two distributions are assumed to be independent of each other.

To express these subsidies in percent of each country’s retail price, which are needed for the model, the value of each category of subsidy (in euros) is divided by the consumption (in joules) of that fossil fuel, where consumption data are taken from the IMF’s Climate Policy Assessment Tool. Then, the resulting subsidy (in euros per joule) is divided by the retail price of that fuel, also taken from the Climate Policy Assessment Tool (in euros per joule). Finally, the resulting subsidies in percent of the retail price are split into consumption and production subsidies in proportion to the split in the data for energy subsidies (in euros). The resulting subsidies are shown in Annex Figure 2.5 , panels 1 and 2.

For example, following this method, the United Kingdom’s subsidies for gas consumption were about €4.5 billion (0.2 percent of GDP) in 2018. This amounts to some 1.7 euros per gigajoule of domestic gas use, or 13 percent of the retail price.

C. Calibrating a Broad Policy Package

This section provides further detail on the calibration of the broad climate policy package scenario, which is described in the main text. This package includes four of the individual policies presented earlier: higher carbon prices in ETS sectors, tighter emissions and energy efficiency standards for road transport and buildings, accelerated permitting procedures for renewables, and public investment in residential heat pumps. These policies are combined to form a policy package that captures the key features of climate change mitigation policies in the European Union, the United Kingdom, and EFTA, and targets an emissions reduction for Europe as a whole of 55 percent of 1990 levels by 2030.

Fossil Fuel Subsidy Levels and Effects of Removing Them

The individual policy instruments in the package are calibrated with reference to the magnitudes in the Fit for 55 proposals, which tend to be larger than the individual policy scenarios discussed previously. The key magnitudes are provided in the main text; this section provides further detail.

▪ Carbon prices in the ETS are 1.5 times higher than in the individual policy scenario (€185 versus €110 in the European Union). This reflects that the impact assessment for the European Union’s ETS Directive ( European Commission 2021 ) found EU-wide emissions reductions of about 7 percent, which are about 1.7 times higher than the (4 percent) emissions reductions in the individual policy carbon pricing scenario discussed earlier.

▪ Energy and emissions efficiency regulations on road transport and buildings are calibrated to reduce energy demand by about 1.8 times as much as in the individual policy scenario for road transport and buildings (that is, by 15 percent versus 8 percent for households and by 8 percent versus 5 percent in the “other services” sector). The impact assessment for the European Union’s ETS Directive ( European Commission 2021 ) found that when the European Union extends its carbon pricing to road transport and buildings, it would achieve an EU-wide emissions reduction of 10 percent relative to the EU Reference Scenario; 10 percent is about 2.5 times the (4 percent) emissions reduction in the individual policy scenario for road transport and buildings regulations discussed earlier. In the simulations here, a factor of only 1.8, rather than 2.5, is needed to achieve the overall 55 percent emissions reduction objective. The cost of the sector-specific regulations is calibrated to be 5.8 percent of gross annual fixed investment, which is about 1.8 times the cost in the individual policy scenario for road transport and buildings regulations.

▪ Public investment in residential energy efficiency programs is calibrated to reduce household energy demand by 11 percent, which would be broadly similar to the 11.7 percent energy saving objective in the European Union’s Energy Efficiency Directive. This 11 percent energy savings is approximately 1.5 times the energy savings in the individual policy heat pumps scenario. Similarly, costs are assumed to be 1.5 times higher than in the individual policy heat pumps scenario, or 0.6 percent of gross annual fixed investment.

A Broad Climate Policy Package Improves Europe’s Security of Energy Supply

(Percent deviation from baseline)

The simulation results suggest that this broad policy package reduces the dependence on imported energy in most of Europe ( Annex Figure 2.6 , blue bars), given that emissions-producing fossil fuels tend to be imported. Europe’s imports fall by 0.6 percentage point of consumption, from 51.8 to 51.2 percent. Europe tends to reduce its US energy imports and partially replace them with Norwegian imports, which greatly reduces geographic concentrations of imports among non-European suppliers ( Annex Figure 2.6 , yellow bars). Europe’s energy imports become 7 percent less concentrated, with the weighted Herfindahl index falling from 0.042 to 0.039.

Annex 3. Wider Policy Needs for the Green Transition

For both climate change mitigation and energy security purposes, Europe needs a broader set of policies than examined in the previous modeling exercises. At a broad conceptual level, the case for further government intervention rests upon the need to address various unpriced externalities (not only with respect to climate and energy security, but also network effects in electricity, learning-by-doing in renewables) and market imperfections (information asymmetries regarding the energy efficiency gains from certain investments; financial constraints to massive green infrastructure scaling-up; weak market competition in electricity, transport, and some critical minerals for the green transition; imperfect credibility of future climate policy). In practice, key issues for policymakers include how to encourage the vast quantities of private investment needed to transform energy systems and how to address the intermittency of renew-ables. To address these challenges, policies will have to support the adoption of new technologies like green hydrogen, design markets that encourage appropriate private sector investment, and enhance the security of critical mineral supplies. This annex briefly reviews key challenges and suggests specific reforms in each of these three areas.

A. Supporting Technologies to Address Intermittency

To achieve its goals of climate neutrality, Europe will need to electrify much of its energy consumption and meet its baseload electricity demand with renewables and nuclear. However, electricity demand at peak times will increase even as fossil-fuel-powered electricity plants are phased out. This means that Europe will need to find large quantities of “flexibility” in the form of zero carbon dispatchable power or demand-reduction measures. The following technologies are expected to be critical for energy security and climate change mitigation:

▪ Batteries . Grid-scale battery storage will be needed to manage intraday and daily balancing, due for example to the intermittency of renewable electricity production. In Europe, 41 gigawatts of new battery capacity are estimated to be needed by 2040, in addition to the 126 gigawatts estimated to be installed by 2030 ( ENTSO-E 2023a ). Support mechanisms for pumped hydro and battery storage, like capacity auctions, could provide the revenue predictability needed to expand investment ( IEA 2023b ). Regulatory frameworks should improve incentives for investment in batteries by ensuring a level playing field between batteries and power producers. For example, they can be allowed to offer ancillary services 18 (like maintaining stable voltage levels) and, like power producers, they can have taxes or fees (like network fees) levied only once when electricity is supplied to the grid instead of levying them also when the batteries are drawing electricity from the grid. In March 2023, the European Commission adopted these recommendations for action by member states ( European Commission 2023d ).

▪ Hydrogen . Green hydrogen will be needed to store energy between seasons (for example, to provide electricity in winter when heating demand is higher), to import energy by sea from faraway countries, and for hard-to-electrify production activities like steelmaking or aviation transport. Some 4–5 terawatts of hydrogen might need to be produced in the world annually by 2050, with Africa, the Americas, the Middle East, and Oceania having the highest potential of becoming exporters, and Europe and Asia becoming likely importers ( IRENA 2022 ). The European Commission (2024) estimates the European Union’s annual production of some 2,150 terawatt-hours of hydrogen by 2050. European governments have actively supported investments in hydrogen-related infrastructure and issued regulations to support the certification of producers of green hydrogen (that is, hydrogen produced with renewables). As was the case in the past with solar power, government intervention can help create a market, bring down costs through learning-by-doing, and facilitate the emergence of the best technological options, for example the best chemical form in which to transport hydrogen. Europe’s publicly funded intermediation mechanism (H2Global), which auctions long-term contracts to purchase green hydrogen in the world market and then re-sells the hydrogen to the highest bidder in the European Union, can help accelerate the development of this market in a cost-efficient way. Such mechanisms could be expanded by, for example, having more countries participate in their funding ( Federal Ministry for Economic Affairs and Climate Action 2022 ).

▪ Demand-side technologies . In addition to supply-side curtailment (that is, turning of wind and solar power plants) and electricity storage, it would help to balance electricity markets if electricity demand could be more responsive to prevailing electricity market conditions. This could be achieved by requiring electricity suppliers to offer customers the option of a contract with flexible prices, as in California, for example. On its own, the market may underprovide this option, because utilities do not fully internalize the network benefits of such contracts ( IEA 2023c ). Public programs could also auction demand-side response contracts (as in France and the United Kingdom) that pay large end-users to reduce their consumption at peak times, because of the large social gain from avoiding blackouts. Similarly, the Agency for the Cooperation of Energy Regulators has recommended that the European Union introduce a regulation to remove barriers to consumers’ participation in wholesale electricity markets ( ACER 2022 ). National authorities could devote more attention to demand-side policies in their long-term planning ( European Commission 2023a ).

B. Making Markets More Efficient and Attractive for Renewables Deployment

Market design could also provide stronger incentives for investment in renewables. Investment would benefit from more predictability in future prices at which electricity will be sold. In principle, such hedges could be purchased on forward electricity markets, but in practice these are illiquid in Europe beyond three years’ maturity ( ACER 2023b ). Therefore, the reforms agreed between the European Parliament and Council in December 2023, which allow governments to offer two-way contracts for difference to zero emission power producers and make it easier to enter into power purchase agreements, are a welcome step toward greater predictability.

Further technical improvements to market design would also enhance incentives to invest in renewables and reduce the impact on the network of their intermittency. For example, renewables could be allowed to compete in balancing markets, which they can do by offering to curtail power production when there is a short-term oversupply ( IEA 2023a ). Finally, electricity market settlement periods need to be shortened (for example, from 60 minutes to 15 minutes, as Germany did with its intraday market in 2011) and electricity trading needs to be allowed closer to the time of physical delivery (for example, from 60 minutes in the intraday market in most of Europe to 30 minutes as tested on the Estonian-Finnish border or even 5 minutes as in parts of Austria, Belgium, and Germany/Luxembourg) ( IRENA 2019 ; IEA 2023b ).

C. Securing Critical Minerals

Europe will also need to secure its supply chain of critical minerals for the green transition, including aluminum, cobalt, copper, graphite, lithium, nickel, and rare earths. These minerals are used in electric vehicles, batteries, and wiring, as well as in renewable electricity technologies such as solar panels and wind turbines. Importing these minerals can expose Europe to geographic concentration risks, given that, for most of them, around 70 percent of global production is concentrated in the three largest producing countries ( IMF 2023b ). This concentration is higher than in fossil fuel commodity markets, in which the top three producers account for about 50 percent of global production, and private agents might not internalize the systemic risk arising from such collective dependence on similar suppliers.

The most effective approach would involve reducing barriers to trade and production of critical minerals. Yet trade restrictions on these materials have proliferated, with export restrictions in particular growing fivefold between 2009 and 2020 ( Kowalski and Legendre 2023 ). Instead, new trade agreements could be struck to prevent other countries from restricting exports to Europe, which they might otherwise consider in response to supply shortages. Similarly, strategic partnerships could reduce barriers to cross-border investments in extraction and refining projects. Since 2021, the European Union has signed strategic partnership agreements with nine countries (Argentina, Canada, Chile, Democratic Republic of the Congo, Greenland, Kazakhstan, Namibia, Ukraine, Zambia). Finally, faster permitting for European extraction, refining, and recycling projects would encourage domestic production.

The European Commission’s March 2023 proposal ( European Commission 2023c ) of a regulation on critical raw materials includes these elements but could be further improved. It would also helpfully coordinate strategic stocks of critical raw materials between member states and enhance the assessment of security of critical minerals supply by requiring stress tests. However, the impacts of domestic content benchmarks (10 percent of consumption for extraction activity, 40 percent for processing, and 15 percent for recycling) should be carefully assessed, given their potential to impose economic costs and delay the green transition. In particular, the target for processing is relatively high and could trigger responses by source countries.

Abraham , Laurent , Marguerite O’Connell , and Iñigo Arruga Oleaga . 2023 . “ The Legal and Institutional Feasibility of an EU Climate and Energy Security Fund .” ECB Occasional Paper 2023/313 , European Central Bank , Frankfurt .

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In this paper, Europe means the European Union, the United Kingdom, and the European Free Trade Association. All areas have ambitious climate targets for 2030 that make them particularly suitable for analysis in this paper.

Calculated based on the change in a simple average of oil, gas, and electricity (futures) prices between 2019 and 2028 (2026 for electricity).

In 2023, the European Union ultimately revised up its renewable energy target to 42.5 percent and its energy efficiency target to 11.7 percent.

This paper does not try to combine these two indicators into one energy security index, as in Le Coq and Paltseva (2009) , because there are many possible ways of doing so, and any such effort would raise questions about the robustness of the results to the choice of index. Keeping the two indicators separate helps to emphasize that energy security is inherently an open concept.

This definition also helps with consistency between country-level and Europe-level results, because Europe’s imports cannot come from European countries.

It is also worth noting that, in a competitive economy where firms produce according to a Cobb-Douglas production function with energy as one of the inputs, the energy expenditure share of GDP represents the elasticity of aggregate output to energy, that is, the percent change in GDP in response to a 1 percent change in the physical quantity of energy input. Therefore, it is the nominal energy expenditure share of GDP, rather than the physical energy intensity of GDP (that is, the ratio of real energy consumption to real GDP), that determines the sensitivity of the economy to changes in energy inputs. Unlike physical energy intensity, the ratio of nominal expenditures to nominal GDP depends on the relative price of energy, which determines how much energy firms use and hence the real marginal product of energy.

This paper considers energy in the aggregate, effectively combining gas, oil, solid fuels (coal and coal products), biofuels, electricity, and heat in common units (joules). Similar patterns emerge for individual fuel types.

The commitment to phaseout appears in the Versailles Declaration of March 10–11, while the deadline of 2030 appears in the European Commission’s press release of March 8.

The ENVISAGE model is described in van der Mensbrugghe (2024) . A model of comparable structure, called “IMF-ENV,” was used recently by the IMF to examine the effects of the war on Europe’s GDP and emissions in Rojas-Romagosa (forthcoming) , which was written alongside this paper.

The model features France, Germany, Italy, Norway, Poland, and the United Kingdom as individual countries, while other countries are grouped as follows: Bulgaria, Croatia, and Romania; Belgium and The Netherlands; Czech Republic, Hungary, and Slovakia; and rest of Europe, which includes the remaining EU and European Free Trade Association countries.

About half of this discrepancy is due to a difference in the definition of energy consumption, which in the model double counts energy used in electricity generation. The other half is likely due to trade costs, which reduce imports in the model by creating a wedge between energy imports and exports.

Norway is the exception, where a boom in economic activity (associated with higher energy exports) reduces its share of GDP spent on domestic energy use.

Over 99 percent of the European Union’s electricity consumption is met through EU production.

Indeed, countries whose energy suppliers are the least “locked in” to supplying Europe (in the sense of Europe accounting for a smaller share of their energy exports) experience the greatest improvement in geographic diversification of energy imports in response to higher carbon prices ( Annex Figure 2.3 , panel 2).

For a broader discussion of fossil fuel subsidies and the emission, GDP, and welfare benefits of their removal, see, for example, Burniaux and Chateau (2014) and Coady and others (2017) . It is worth noting that removing fossil fuel subsidies has a different impact on import dependency from that of carbon taxation, for two reasons: (1) these subsidies are not equivalent to a negative carbon tax, because they are typically not based on the carbon content of each fuel; and (2) the peculiar design of key European economies’ subsidies is such that they primarily benefit domestically produced fossil fuels. Indeed, import dependency ratios fall throughout Europe in a simple illustrative simulation under which countries impose a fat fossil fuel consumption tax (of 3 percent of the price of each fossil fuel), for example.

It is worth noting here that alternative weighting schemes, which would assign greater weight to the geographic concentration component, could deliver a net improvement in Poland’s security of supply.

The finding that multiple policy instruments are needed to achieve multiple policy objectives—here, energy security, emissions reduction, and economic efficiency—echoes a general principle in economics called the Tinbergen Rule.

The European Union defines ancillary services in Directive (EU) 2019/944 to include balancing power supply and demand, steady state voltage control, fast reactive current injections, inertia for local grid stability, short-circuit current, black start capability, and island operation capability.

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Essay on Water Crisis in Pakistan | Essays for CSS

Outline:Water Crisis in Pakistan

I. Introduction

III. Major uses of water

IV. Causes of present alarming crisis

V. Far-reaching reparations

VI. Recommendations

VII. Conclusion

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Saeed Wazir

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4. The Energy Security Effects of Different Climate Policy Tools

5. A Broad Policy Package

Annex 2. Further Calibration Details and Simulation Results

B. Calibrating Different Climate Policies

Annex 3. Wider Policy Needs for the Green Transition