Impact of the war in Ukraine on countries in Central Asia and Eastern Europe: LCU study for the OECD Green Action Task Force

For the annual meeting of the OECD’S Green Action Task Force, we contributed a background study analysing the impact of the war in Ukraine on climate and energy policies in eight countries of the European Union’s Eastern Partnership and Central Asia: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, and Uzbekistan.

We find that:

  • Globally, countries will face strong incentives to lower domestic consumption of fossil fuels due to high and unpredictable prices and supply issues, such as increased demand for non-Russian fossil fuels
  • Exporters of energy and/or metals will be incentivised to increase exports but may be constrained by capacity or logistical difficulties
  • Countries with closer ties to Russia may have access to discounted energy imports, weakening incentives to conserve energy or invest in renewables
  • However, this is counteracted by a new energy security paradigm emerging in the region. Domestic renewable energy sources provide an attractive alternative to increasingly price-volatile fossil fuel imports
  • A weaker global and regional macroeconomic situation will lead to a more challenging context for ambitious domestic climate policy in the region
  • Conversely, reduced growth may lead to lower emissions in the short run
Manuel von Mettenheim, Rouven Stubbe, David Saha, Pavel Bilek

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Policy Papers refer to current or possible future policy topics. An in-depth economic analysis of the selected topic is presented, from which policy recommendations and possible actions are derived.