18 Chief Economists Outlook Figure 10. Energy policy to address the crisis In the short term, which policy approaches are likely to be effective in tackling the energy crisis in net energy-importing economies? Highly ineffective Ineffective Neutral Effective Highly effective Share of respondents (%) 5 Energy price caps Reduction in VAT and/or energy taxes Diversification of energy sources Direct cash transfers to households and businesses Measures to reduce energy consumption 5 41 9 36 9 5 5 27 18 45 5 18 23 41 18 5 18 14 41 23 9 9 55 27 Most of the other policy approaches considered by the chief economists were also viewed as being effective or highly effective by the majority. However, the use of energy price caps stands out as the most contested option, with an almost equal split between those viewing caps as effective and as ineffective. This is unsurprising given the intensity of debate that has surrounded the introduction of a price cap for gas in the EU, including concerns about its potential implications for the financial stability of the Eurozone. 22 The EU gas price cap, as well as a G7 oil price cap, were approved in December 2022, and it will be some months before there is clear evidence as to their effectiveness. 23 On long-term energy policies, chief economists were asked to focus on the effectiveness of various measures in terms of achieving energy security for net-importing economies (see Figure 11). Reducing consumption again features prominently, with 86% viewing it as an effective strategy, but is in third place overall. Improved energy efficiency is the clear frontrunner, with unanimity among respondents as to its effectiveness in the long term. This is in line with the International Energy Agency (IEA) view that energy efficiency is central to the shift that needs to take place in advanced economies. 24 Many countries, particularly in Europe, have already begun to move in this direction in response to the crisis. Germany, for example, has introduced higher efficiency standards for new buildings, 25 and France launched its “Energy Sobriety” plan in October 2022. 26 22 ECB, 2 December 2022. 23 Council of the EU, 19 December 2022; Council of the EU, 3 December 2022. 24 International Energy Agency (IEA), November 2022. 25 Sgaravatti, Tagliapietra, Zachmann, November 2022 26 Government of France, October 2022. Source: Chief Economists Survey, December 2022