Europe produces only 57% of the energy it consumes, and imports most of its oil, gas and coal. As well as the economic burden, this import dependence makes the region highly vulnerable to geopolitics, supply disruptions and international price swings. This was brought home most recently by the Arab spring and the interruptions to Libyan oil and gas.
The threat to Europe’s energy security is liable to grow in future as consuming countries around the world compete for scarce fossil fuels. Dwindling EU production will push up demand for imports, while the legitimate aspirations of China and other emerging economies for growth and development will contribute to upward pressure on prices. Turmoil in the Middle East and North Africa, or any other major producing region, could lead to further disruptions to supplies, provoking a spike in prices and threatening to aggravate Europe’s economic difficulties.
Addressing these challenges – and that of climate change – calls for a fundamental transformation in the way Europe supplies and consumes energy, including a rapid shift in investment to low-carbon and energy-efficient technologies. That process has started, but has much further to go.
Natural gas – the least carbon-intensive of the fossil fuels – could play a central role in that transition, for example by backing up intermittent power generation by renewable sources such as wind and solar. Exploitation of Europe’s unconventional gas resources, which recent advances in technology have made possible, would also help to curb demand for imports. But the growth in output will depend on the gas industry dealing successfully with the environmental challenges during extraction; any golden age of gas will require golden standards for production.
Nuclear power could also make a vital contribution to Europe’s energy security and climate objectives if the public can be reassured about safety, and if the EU policy and regulatory framework is made more conducive to private investment. Establishing a truly integrated and competitive energy market would support this long-term transition, and enhance short-term energy security.
Europe will still need to import large volumes of oil and gas for many years to come, so maintaining emergency response mechanisms to deal with short-term supply disruptions will remain crucial. But prevention is better than cure. Europe has much to gain from strengthening its cooperation and dialogue with supplier and transit countries – notably Russia, which will most likely remain Europe’s leading supplier of energy.