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2022/04/05 / Erste Group Research

CEE Special | Seeking independence from Russian energy

In CEE, gas constitutes between 10% and 25% of total energy supply, with Russia as main supplier. Efforts to wean region off Russian gas are key priority.

Since the war in Ukraine started, the EU has been confronted with its energy dependence on Russia. The importation of natural gas plays an especially important role in the energy mix of Europe, including the CEE region. In CEE, gas constitutes around 10% of total energy supply in Slovenia and Serbia, close to 17% in Czechia and Poland and at least a quarter or more in Croatia, Romania and Slovakia.

We identify the most energy intensive sectors in CEE (such as basic metals, mining and quarrying, chemical and chemical products) that in the case of substantial energy supply disruption would suffer the most, not only through direct exposure, but also through indirect links. We also look at the share of Russian origin in the value added in CEE final demand and exports; it differs across sectors substantially. While chemicals and non-metallic mineral products (with high share of Russian origin in value added) create roughly 5% of value added in CEE, other sectors are of much less importance (minig and quarrying, fishing and agriculture)

In order to reach independence from Russian energy supply, gas in particular, the EU announced an ambitious REPowerEU plan. It aims to reduce demand for Russian gas by two thirds already before the end of this year and transform the energy system by 2030. Curbing two-thirds of demand by the end of 2022 is probably not an impossible scenario, but would come at a significant cost. While turning down thermostats seems to be a quick fix, bringing relatively high energy savings (10bn cubic meters), curbing industrial demand would likely cause high economic costs.

As far as the 2030 timeline is concerned, according to the EU, tripling solar and wind energy production could displace 170bn cubic meters of gas by the end of the decade. Acceleration in increasing building efficiency, installation of electric heat pumps or expanding bio-energy production would result in savings of at least 35bn cubic meters each, that is two-thirds of annual gas imports from Russia.
Last but not least, there is substantial regional variation in the amounts the local economies spend on final consumption of gas. Altogether, the average total final consumption expenditure on gas in the local economies was at 1.2% of GDP – with Slovenia an outlier at the lower end, and Hungary together with Slovakia sticking out at the top end. Despite the nominal differences, once adjusted for the size of the economy no country sticks above 1.8% of its GDP.

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General information

AuthorErste Group Research
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


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