This report focuses on the impact of the war in Ukraine on the energy sector in 2022 and early 2023 and Its implications at the macro and micro level in the EU. The EU is a net importer of energy and is highly dependent on fossil fuels. In 2021, almost 70 percent of the EU’s energy needs were met from fossil fuels, mostly imported from Russia. This has led to legitimate concerns on the security of energy supply andhas also made the EU susceptible to fluctuations in fossil fuel prices. Russia’s invasion of Ukraine in February 2022 led to disruptions in the supply of fossil fuels, especially natural gas, to the EU and a spiraling of energy prices. The macro level effects of the war in Ukraine as evidenced by higher inflation and tighter monetary policy as well as lower growth are relatively well-known but the impacts on firms and households have been very heterogenous with significant policy implications.

Report by the World Bank