The next major challenge for Europe is to close the energy security gap: Vladimirov

After Europe's energy crises erupted at the end of 2021, it has taken four years to move from emergency response into system redesign. The European Union has not yet recovered. The European Union is still vulnerable, and the progress towards a clean, affordable, and secure supply of energy remains uneven. The Energy and Climate Security Risk Index, developed by the Center for the Study of Democracy, measures energy security in four areas: geopolitics (including affordability), reliability, and sustainability. The study's findings show a growing energy security gap between countries like France, Sweden, and Denmark, and those who are lagging behind, such as Hungary Italy and Bulgaria.

The biggest achievement in Europe's energy security has been the reduction of its dependence on Russian fossil-fuels. Eurostat reports that gas imports from Russia fell from 40% of EU supplies in 2021 to 10% in 2025. The EU achieved this by increasing purchases from the U.S.A., Norway, and Qatar.

Italy and Germany, which were once among the largest consumers of Russian energy, have virtually stopped importing it. However, several countries in Central Europe are still highly vulnerable. According to Eurostat data, Hungary continues to buy more than three quarters of its natural gas from Russia. Slovakia is still tied to Russia’s Gazprom agreements.

However, new dependencies are also emerging.

The EU gets most of its LNG from the U.S. This leaves it vulnerable to future trade negotiations with Washington.

In addition, Europe's rapid expansion of solar, battery, and wind infrastructure has increased Europe’s dependence on Chinese supply chains. China is the dominant refiner of many essential minerals. It processes more than 60% of the global lithium, 80% cobalt and 70% of rare Earths. All are critical to the EU's energy sector. Europe is at risk of replacing one dependence with another if it does not diversify.

But Europe has options. France has increased its capacity to refine silicon for solar manufacturing. Sweden, meanwhile, already provides up to 90% the EU's domestically-produced iron ore while expanding its copper and Zinc output. Portugal is developing large lithium reserves and Finland has major nickel and zinc refining facilities.

Serbia's Jadar Mine could provide nearly 90% of Europe’s current lithium needs, if it were to be commissioned. However, these needs are expected rise dramatically in the next few years. Ukraine also has significant deposits of titanium and rare earths, but it is not known if these deposits can be extracted and processed in a profitable manner.

AFFORDABILITY CHALLENGES

In 2022, geopolitics dominated energy policy. Today, affordability is the main challenge. The affordability risks in Europe have increased five-fold since 2020, largely because of the price shocks that followed Russia's invasion.

According to Eurostat, retail power and gas prices are 40-70% higher than they were before the crisis in Southern and Eastern Europe. The most vulnerable countries include Poland, Bulgaria, and the Czech Republic, which have a high coal consumption. Nordic countries and France, with less-carbon-intensive systems, face much lower affordability risks. The high cost of energy continues to put significant pressure on the European industry. In Europe, between 2021 and 2020, over 1 million industrial positions disappeared, mostly due to the high energy costs. Europe faces a loss of competitiveness if it does not sign long-term contracts for clean energy and adopt stronger efficiency measures.

RELIABILITY ISSUES

In Europe, the nature of reliability risks in energy has changed. In an energy system that was dominated by fossils fuels, the main challenge was to secure supply. The problem today is that renewables have been rapidly integrated into grids, without adequate infrastructure.

The blackout in the Iberian Peninsula that occurred in April was a clear example. Solar power systems that were dominated by inverter generation and lacked backup suffered a sudden 15 gigawatts loss.

Germany and the Netherlands, two wealthy countries, invest in digitalised grids as well as interconnections and energy storage. In Central and Eastern Europe however, outdated grids, limited investment and outdated energy systems leave energy systems vulnerable to future outages.

SUSTAINABILITY GAP

The EU has ambitious sustainability goals, including Fit for 55, REPowerEU, and the Green Deal. The implementation of the Green Deal is uneven in different parts of the region.

Sweden, Denmark, and Finland, for example, have used renewable energy, industrial decarbonisation, and strong governance in order to reduce the risk. France has benefited from the use of nuclear power to keep costs and emissions down.

Many Central and Eastern countries are hampered by their legacy infrastructure, and lack of governance. They are also seeing their emissions and energy prices rise.

The ECSRI also suggests that countries with high sustainability risk are often faced with affordability and geopolitical issues. Clean energy, industrial strategy, and grid investments are all more resilient in those countries that integrate them.

It has been four years since Europe proved it could act in crisis. But the next phase of energy transition requires more than reactive policy. This will require a long-term, coherent strategy as well as better coordination in the region. The energy security data makes one thing very clear: Europe's sovereignty and prosperity are at risk if the energy policy divide is not closed.

The views expressed are those of Martin Vladimirov (Director of the Geoeconomics Program of the Center for the Study of Democracy, CSD).

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(source: Reuters)