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LESSONS FROM 2021 TO 2023 Inflation management calls for a sustainable energy transition in Europe
The briefing analyzes the relationship between gas dependency, electricity prices, and inflation in the EU from 2021 to 2023. It finds that gas-based marginal pricing drives electricity costs and energy inflation, while renewable energy and energy efficiency can lower and stabilize these prices. The authors contend that the ECB's current broad interest rate hikes hinder the capital-intensive investments needed for this transition, potentially undermining the bank's own price stability mandate. They recommend targeted monetary policy to support the energy transition.
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Document type: Briefing
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