ABSTRACT
At times of instability in global energy supply and fluctuating international oil and gas prices, European countries seek to reduce fuel import dependency through energy savings and faster deployment of green energy. Calculating the continent’s fuel import bill, as usually presented, offers only a partial picture of the challenge. This paper applies an economy-wide assessment for Cyprus, a country which greatly relies on imported fossil fuels but has made some progress towards decarbonisation. Combining energy, economic and trade statistics with technical calculations, we find that already by mid-2025, renewables deployed in recent years have contributed to the accumulation of very substantial net benefits, leading to a benefit-cost ratio ranging between 11 and 19. Input-output modelling shows that economy-wide benefits have led to a cumulative additional value added of the order of 1.4 billion Euros’2023 during the decade 2015-2024, with a 0.5-1% GDP increase per year thanks to renewables investments and avoided fossil fuel imports. The approach presented here minimises the uncertainties and assumptions that are necessary to run more sophisticated economic models and can offer credible and valuable insights on the economy-wide impact of strengthening national energy security through decarbonisation policies in any country.
Keywords: decarbonisation; energy policy; energy security; input-output analysis; renewable energy; trade balance