Faced with the second energy crisis this decade, the European Union aims to reduce dependence on natural gas, coordinate gasoline, diesel, and jet fuel supplies, and accelerate renewable energy capacity installations.
The European Commission on Wednesday unveiled proposals aimed at protecting Europeans from the fossil energy crisis and accelerating the shift to clean, homegrown energy.
“For the second time in less than five years, Europeans are paying the price of Europe’s dependency on imported fossil fuels,” the Commission says.
The new measures are designed to offer immediate relief to households and industries while addressing long-term dependencies, such as on gas for power generation.
Since the Iran war began at the end of February, the EU has spent an additional $28 billion (24 billion euros) on energy imports due to higher prices – “without receiving a single extra molecule of energy,” the European Commission said.
“The current geopolitical situation is a stark reminder that accelerating the transition to clean, secure and affordable energy is an economic and security imperative.”
Immediate Measures
As a large part of the Middle Eastern oil and fuel supplies remains trapped at the Strait of Hormuz, the EU is accelerating coordination among all member states to ensure the availability of jet fuel and diesel, including the availability of oil refinery production capacities.
The bloc will also establish a new Fuel Observatory to track EU production, imports, exports, and stock levels of transport fuels, to quickly identify potential shortages and balance fuel distribution in case of emergency stock releases.
Support for vulnerable households and emergency measures to support the industries most exposed to the energy price spike are also part of the measures to ease the blow from the energy crisis. This is Europe’s second such crisis in four years, after 2022, when the collapsed Russian pipeline deliveries triggered a cost-of-living crisis and made many EU-based energy-intensive industries uncompetitive.
The Commission will also present a legislative proposal on network charges and taxation, ensuring electricity is taxed less than fossil fuels. This is to incentivize more power generation from domestic renewable sources that could replace some of the gas-fueled power supply whose costs spiked as Qatar’s LNG went offline in early March and resulted in soaring natural gas prices in Europe and Asia.
Related: UK Fund Targets $20 Billion for Clean Energy in Developing Economies
The immediate measures could ease some of the burden, especially on households, and potentially redistribute jet fuel supplies, which industry and analysts say are at risk of shortages within weeks.
The war in Iran has cut most of Europe’s imports of jet fuel, while local output has been falling for nearly two decades due to dozens of refineries closing permanently or being converted to biofuel production.
Airports industry group ACI Europe welcomed the EU’s new fuel supply coordination mechanism.
“No airport in Europe is currently facing jet fuel shortages, and flight operations are proceeding normally,” said Olivier Jankovec, Director General of ACI Europe.
“But the plan adopted today is the adequate strategy and response to mitigate potential jet fuel shortage risks, given how uncertain the situation remains over the resumption of the safe and stable passage through the Strait of Hormuz.”
Preparing for the Long Term
Exposed to a geopolitical shock and a new war that hiked energy prices once again, the EU is doubling down on “accelerating the shift to homegrown clean energy to replace oil, gas and fossil transport fuels.”
The Commission aims to unveil an Electrification Action Plan by the summer, it said in the actions proposed on Wednesday. The plan will include an ambitious electrification target and measures to remove barriers to the electrification of the industrial, transport, and building sectors.
“It is vital to speed up investment in the clean energy transition now, not least to break EU dependence on fossil fuels and make the EU resilient to future energy crises,” the Commission said.
“Member States that have already invested in the clean energy transition are reaping the benefits, with electricity prices generally below the EU average.”
The true impact of the current crisis is long term, evolving, and unpredictable, Dan Jørgensen, European Commissioner for Energy and Housing, said.
“As we cannot predict everything, we must be prepared for anything,” Jørgensen noted.
“We will coordinate more and better to secure supplies. We will seek to maximise existing refining capacity in Europe, and look into our rules on strategic and emergency stocks, to see if more can be done,” the commissioner said.
Yet, Jørgensen acknowledged that Europe needs to accelerate investment and attract much more private investment that it urgently needs to boost power infrastructure with more connections, more storage capacity, and more flexibility.
The Commission sees the Middle East crisis as “a wake-up call and a turning point – when Europe steps away from fossil fuel dependence, and steps towards clean energy autonomy,” Jørgensen said.
“Because now it is more obvious than ever – clean energy means security,” the official added.
“In the future, instead of buying something and burning it to get energy, and then buying it again, we need to produce our own, homegrown, clean energy.”
By Tsvetana Paraskova for Oilprice.com