11 Annual Report 2021 Climate change is one of the biggest challenges that the world faces today, making the need for coordinated and decisive action a matter of urgency. The energy sector, which is unquestionably one of the drivers behind the global economy, is at the epicenter of this task. Following the negative impact of the pandemic, Europe is battling a record-breaking surge in energy prices that threatens to derail the post-pandemic economic recovery, strain household incomes and even tarnish the nascent green transition. A series of market, geographic and political factors have merged into a perfect storm that shows no signs of abetting. Nevertheless, the biggest challenges in the energy sector started with the pandemic-induced recession reminding us that the world's energy map needs to be reshaped starting from energy production, distribution and use. The year 2021 was undoubtedly a year of drastic changes for national energy activity. The national electricity market was given a taste of the future, with a higher penetration of renewable energy sources and concerns about security of supply. At the same time, after bouncing back from the pandemic and the returning to normalcy, emission allowances have seen an unprecedented rapid increase due to the European policies on Green Energy. The lack of natural gas, a major long-term disadvantage of the Cypriot economy, has now been converted into a stroke of luck, given that the natural gas prices in the rest of Europe have multiplied over recent months and, in combination with constantly record-high emission allowances, have led to an unprecedented energy crisis. The introduction of natural gas to the island is not expected to suffice in lowering the electricity prices for Cypriot consumers and industry on its own. This could be feasible with the large-scale implementation of renewable energy sources in combination with storage and/or in combination with Cyprus being interconnected to the Continental European Network. With the EU determined to increase the cost of emissions, Cyprus will ultimately need to follow suit. The switch to renewable energy sources and higher energy efficiency levels is now a matter of urgency. Renewable energy sources hold the key for the switch to low-carbon energy forms and the creation of a sustainable energy system. Cyprus is going through an era of unprecedented changes and challenges that stem from the opening of the competitive electricity market, as well as the relentless efforts that are being made for the island to cease being "electrically isolated" from the rest of Europe. At the forefront of the developments, CERA took action and will continue to do so driven by the creation of new sustainable and peoplecentered regulations that will always focus on the consumer, the environment, but also national economy. Special thanks are expressed to the CERA Office staff for their valuable contribution, productivity and readiness that they demonstrated in dealing with the challenges that arose throughout the year. INTRODUCTORY NOTE OF THE CHAIRMAN, VICE CHAIRMAN AND MEMBER OF CERA
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