Opinion & Analysis

EU climate and energy policy after the energy crunch

European energy markets today are in a very different situation from a year ago. Judging by Commission President Ursula von der Leyen’s annual State of the Union speech, it may even seem that the energy crisis is over.

Europe has diversified its gas supply following Russia’s aggression on Ukraine and the ensuing energy price spike. A more diverse gas supply mix is a structural improvement for EU energy security, but it has also made Europe more exposed to global gas market fluctuations. While Europe used to import most of its natural gas from Russia via pipeline, it is now increasingly reliant on imports of liquefied natural gas (LNG) which is traded on global markets, characterised by more volatile commodity prices. Still, both gas and electricity prices have come down substantially from their 2022 highs, making energy more affordable.

This policy brief looks back at the past two years and assesses how EU energy and climate policy has changed because of the energy crunch. Some changes have been temporary, while others are likely to affect the European energy market for longer. This brief concludes that the EU should be more ambitious in facilitating investments in energy efficiency, renewables and power grids, increasing and rationalising the funds it devotes to supporting such investments. The Commission should also strengthen its oversight of member-states’ progress towards energy and climate goals and policy implementation. It should monitor and push for climate investments in its regular interactions with member-states – for example as part of the National Energy and Climate Plans and of the European Semester.

Read full policy brief at original link.

About the author

Elisabetta Cornago is a senior research fellow at the Centre for European Reform, where she works on EU energy and climate policy from an economics perspective. Recently she has been focusing on the impacts of the energy crunch on the EU’s economic and energy policy; on the EU emissions trading scheme and carbon border adjustment mechanism; and on the role of Europe’s Recovery and Resilience Facility and, more broadly, of EU-wide fiscal spending for the energy transition.

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