EU energy (in)security: lessons learned
Last year the EU was forced to face a hard truth: trade interdependencies are not always sufficient to keep conflict at bay. More than a year after Russia’s invasion of Ukraine and energy blackmail to the EU, has the Union learned its lesson? And if so, did it enhance its energy security?
Let’s look at the facts.
In the short term, there is no denying that the EU, albeit with some delay, reacted to address the gas crunch and spike in energy prices triggered by Russia. Electricity and gas reduction targets, gas storage requirements, energy savings incentives, and rapid diversification of suppliers were some of the rather successful measures taken to keep businesses running and households warm.
In 2022 the EU was able to replace around 64 billion cubic meters (bcm) of Russian gas with imports of liquified natural gas (LNG) mainly coming from the US, Norway, and Algeria. The LNG supply to Europe was also facilitated by a lower gas demand from China, then under COVID lockdowns. Diversified gas imports, together with the EU’s reduced energy demand and a relatively mild winter, contributed to reducing Europe’s share of gas imports from Russia from 40% to just 7% in one year.
In the medium term, the EU learned an even more important lesson: REPowerEU. The plan reinvigorated the Union’s decarbonisation ambition by adding a second prerogative of energy security on top of the pre-existing climate neutrality one. With REPowerEU, the EU admitted that its energy dependence on third parties is fuelled by Europe's irremediable lack of endowed fossil fuels which today still represent a significant, albeit diminishing, share of the energy mix. Eliminating that share through renewable-driven decarbonisation will reduce exposure to external dependencies.
While the reasoning behind REPowerEU is commendable, will it have an impact on the EU security of supply?
Cillian O'Donoghue, policy director at Eurelectric, confirms it in a panel debate hosted by the Florence School of Regulation:
“If we implement properly the REPowerEU strategy – which in essence is just a clean electrification strategy – security of supply will mean something different in the future to what it is today. Overall, we will be more secure as we will have replaced fossil fuel imports with domestic production, particularly wind and solar.”
The new REPowerEU objectives have added an additional 41 GW of wind power and 62 GW of solar PV to the Fit for 55 targets. This translates into more than 753 GW of additional renewable capacity by 2030 shows Eurelectric’s Power Barometer 2022. Reaching such unprecedented targets would require overcoming three key bottlenecks:
Permitting has always been the major bottleneck with some wind projects, for example, taking ten years to get the permit when you only need two to build. In this respect, the recently agreed Renewable Energy Directive has put in place a new permitting framework that is expected to significantly speed up permit granting, while respecting environmental legislation.
Repowering the EU’s enhanced climate ambition means deploying hundreds of gigawatts of renewables, installing millions of heat pumps, and charging millions of electric vehicles (EVs) across the continent by 2030 and beyond. All these new assets will need to be connected to the electricity grid and reliably powered by a weather-resilient smart infrastructure. The recently proposed electricity market reform should therefore put in place the right incentives for anticipatory investments in grids to prepare European infrastructure to sustain the future wave of renewable power.
As we move from a fossil fuel intensive to a raw material-intensive economy, we need to secure access to critical raw materials. These include especially, nickel, cobalt, manganese, and lithium, with the latter being key for EV batteries. The Commission’s recently proposed Net Zero Industry Act and related Critical Raw Material Act are positive signals in this direction.
Pushing boundaries to maximise the potential of direct electrification also comes with the acknowledgement that direct electrification might not always be possible. Non-electricity-based solutions can therefore be useful in specific applications where no feasible or competitive electricity alternative existed.
It is nonetheless paramount that exploring alternative energy carriers, such as hydrogen, is done so with a clear cost-benefit analysis. This would ensure that the development of the energy infrastructure - including the repurposing of gas networks into hydrogen ones - is cost-efficient and coordinated with the parallel deployment of renewable and low-carbon generation.
Energy security is a long-lasting challenge for the EU, one that can only be tackled through a steady concerted effort across EU members to diversify supply, increase energy efficiency and decarbonise faster with clean and renewable electrification, higher flexibility and a modernised grid. Now that we have learned the lesson, let‘s put it into action.