AUTHOR=Enescu Adrian-Gabriel , Szeles Monica Răileanu 

TITLE=Discussing energy volatility and policy in the aftermath of the Russia–Ukraine conflict

JOURNAL=Frontiers in Environmental Science

VOLUME=Volume 11 - 2023

YEAR=2023

URL=https://www.frontiersin.org/journals/environmental-science/articles/10.3389/fenvs.2023.1225753

DOI=10.3389/fenvs.2023.1225753

ISSN=2296-665X

ABSTRACT=The ongoing Russo-Ukrainian War has highly affected energy markets in the EU and worldwide, with different EU- and country-level emergency policy measures being advanced to tackle high energy prices. Despite the progress in green energy initiatives and the race toward climate neutrality by 2050, high energy prices are a matter of concern for all EU countries in the short to medium term. The current study investigates the energy price volatility in the aftermath of the Russia-Ukraine conflict, which is of high interest for designing effective government measures (such as monetary and energy policies) addressing the changes consequently occurring in employment, economic activity, commodity and food prices, and ultimately in sustainable development. For the empirical analysis, we have employed generalized autoregressive conditional heteroscedastic (GARCH) models to capture the volatility of the following energy commodities: Brent crude oil, TTF natural gas, and UK natural gas. The empirical results reveal an elevated degree of persistence of the volatility, namely that the GARCH term has a slow decay, as well as pronounced fluctuations for all the energy products. The vulnerability of the EU’s energy policy to geopolitical factors is highlighted, especially for gas, which could be due to the dependence on Russian imports. Moreover, the sanctions imposed by the EU on Russia, namely the sixth package of sanctions, have a minimal immediate effect on stabilizing the energy returns. The study offers several policy recommendations to improve the resilience of the EU’s energy sector.