A harmonised long-term strategy must be Europe’s response to the energy crisis


The energy crisis has heightened the urgency for Europe to transition to a diverse and secure energy supply – but the bloc’s long-term strategy must focus on detaching its supply from geopolitical risk, writes Timur Tillyaev.

As winter draws close, geopolitical events coupled with Europe’s over-reliance on too few energy sources demonstrated the continent’s lack of long-term strategy. Unprepared to face the colder months, it had to resort to crisis management.

In the face of the current unprecedented energy crisis, emergency measures by the European Union (EU) showed what could be rapidly achieved. In June, the European Council (EC) adopted an emergency regulation to increase gas reserves in the short term to secure sufficient supply. The 80 per cent target set by the EC was met and over 90 per cent of the EU’s gas storage is currently filled. In September, the EU agreed to a €140bn ‘windfall tax’ on certain power companies who profited from the rising energy prices. The proceeds from this levy will be used to cushion the blow of rising prices for businesses and consumers.  Both measures testified to the EU’s capability to rapidly implement long-sought measures to ensure energy security.

Some variables could still worsen the situation though, including an unexpectedly cold winter or interruption of supplies of liquified natural gas from the US during hurricane season. Thus, the bloc must move past crisis management mode and gear towards a long-term strategy to ensure predictable energy supplies for future winters.

In the context of the current crisis, this must involve a diverse mix of energy sources and a joint European approach that ensures the bloc’s energy supply is independent of geopolitical risk, meaning it is not continuously affected by external events.

Even before this year’s crisis, nuclear power was considered to be part of the solution to Europe’s energy transition, especially given the promise of new-generation modular reactors that are relatively low-cost, easier to build and waste-efficient. A 2021 report by the United Nations Economic Commission for Europe made a case for nuclear as an essential part of the mix. 

 “At COP26, we stopped talking about objectives and started talking about implementation. People realised nuclear had to be there alongside renewable energy. What happened with Russia’s war in Ukraine also really changed things,” stated nuclear energy analyst Michel Berthélemy. This can be witnessed in Germany’s decision to delay the planned shutdown of its last two nuclear plants and Belgium extending the lifespan of two atomic reactors by ten years.

But, after decades of dwindling investment Europe’s nuclear power infrastructure is scant and outdated. Even in France, where atomic power generates over 70% of electricity, the industry is scrambling to adjust staffing levels, training and construction capacity.

Therefore, it is urgent to diversify the energy supply by type and market. Renewables are an equally important part of the solution to Europe’s energy needs and can be ramped up faster than nuclear infrastructure. Renewable energy innovation is at its peak, and its cost is now at parity with, or even cheaper than, fossil fuels in many markets.

According to senior policy advisor at E3G, Raphael Hanoteaux, “it’s never been cheaper, and it’s never made more sense to invest in green energy. It’s not just a climate issue; it’s a security issue.”

In fact, record additions of solar and wind power capacity this year are expected to increase the EU’s output from these renewable sources by over 15 per cent when compared with last year. This record increase in electricity production from renewable energy, eliminated the need for the import of additional fossil gas, saving the bloc almost €11 billion.

However, even a successful switch by Europe to non-carbon energy, with nuclear and renewables diversifying the mix, cannot eliminate all risks.  Currently, China supplies over 80 per cent of the materials for solar power and most rare earth metals used for wind turbines and electric cars, while Russia is one of the biggest suppliers of the enriched uranium used in nuclear plants. This is where collaboration and European cooperation has a role to play.

Ahead of November’s COP27 summit, a joint report published by the IEA and the UN urges that companies and countries work together to create and scale markets for clean energy and technologies, replacing the ‘piecemeal’ approach and ‘collaboration gap’ that is not proving effective.

A joint strategy and closer dialogue will allow the EU to work with companies innovating on technological developments in green energy, leading to self-reliance. This can be achieved through identifying and investing in untapped uranium reserves in other countries, focusing on making green hydrogen a more significant part of the energy mix and moving towards reducing red tape for new zero-carbon projects.

There’s no doubt that Europe faces a tough winter ahead.  But this year of turmoil and crisis should help us recognise that European countries need to work together to achieve a diverse and secure energy supply that accelerates the bloc’s climate transition goals and protects the continent from future energy crises.

Timur Tillyaev
Timur Tillyaev
international investor in renewable energy


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