ContextSpeech to euro area and EU finance ministers at the Eurogroup in inclusive format; the IMF advises and lends to its 191 members to keep the global economy stable.
Why it mattersUrges an energy union to cut Europe's high and volatile power prices, estimating that finishing planned grid links could lower average electricity prices by more than 10 percent.
- The Middle East war has cut oil and gas supply and hits poorer importers hardest.
- Most new European support measures are untargeted, which mutes price signals and wastes money.
- Europe's energy prices are high and volatile, and it still imports over half its energy.
- Target any further support and keep the incentive to save energy.
- Expand grids and interconnectors under a common EU energy blueprint.
- Protect the Emissions Trading System to spur clean investment.
Read the speech summary
1. The shock and the lessons of 2022
Three months into the Middle East war, world oil supply is about thirteen percent below its prewar level and liquefied gas about twenty percent, with very uneven effects. Georgieva first asked Europe to help the hardest-hit poor countries reach fertilisers and diesel. She praised decades of transition policy, which cut the energy intensity of European output by more than forty percent and ended dependence on Russia; today's gas shock is much smaller than in 2022, though the oil shock is almost as large.
2. Targeting support
Most new aid measures are temporary and cheaper than before, but again largely untargeted, which mutes the price signal and reduces energy saving. In 2022 over two-thirds of support was poorly aimed; protecting only the poorest forty percent of households would have saved almost two-thirds of the cost, whereas the richest fifth received nearly three times more than the poorest. The IMF therefore urges targeted help that still preserves savings.
3. Why an energy union
Three facts make the case. European industry pays two to three times more for electricity than American and Chinese rivals, and the doubling of real industrial energy prices has cut value added in energy-intensive industries by an estimated eighteen percent. Prices are also volatile and dispersed, with some countries paying over three times as much as others. And the union still imports more than half its energy, so outside disruptions pass quickly into prices.
4. How to get there
Speed up cheap renewables, integrate the internal market and keep private incentives right. Completing planned interconnectors, with more solar, wind and nuclear power, could lower average electricity prices by more than ten percent, and prices often fall on both sides of a new link; part of export revenue can be shared with the public. A common blueprint for supply, storage and interconnection is needed because wind and sun are unevenly spread. The carbon market should be protected: its revenue could reach about one percent of output, more than the public investment cost of the transition. Europe should use the crisis and act as one.