Energy and Climate Futures: Europe after the Energy Crisis

The decoupling of the European energy system from Russian energy sources after the invasion of
Ukraine implies a fundamental and abrupt shift in the European external energy policy. The geographical
diversification of supplies increases the geopolitical weight of alternative exporters, while
source diversification favours the deployment of renewables, but also the return of nuclear and even
coal generation. The diversification of European supplies and sources without further reducing EU's
strategic autonomy will require a significant diplomatic effort at all levels.

Within Europe, emergency measures, unthinkable to most analysts a few months ago, have been
implemented across all Member States, from gas price caps to fossil fuel subsidies and the nationalisation
of energy companies. More policy measures are in the making, including a cap on Russian gas
imports, new infra-marginal regulation and joint gas procurement mechanisms, among many others.
But beyond extraordinary, short-term emergency and contingency measures, the European energy
crisis has opened the debate on the long-term electricity market design. Different alternatives are
being considered but consensus is far from being achieved regarding the balance between
preserving market signals through marginal pricing and preventing market failures to unleash an
energy price crisis and therefore an economic crisis.

While short-term measures like the re-opening of coal plants may be prolonged over time via the
postponement of coal phase outs, it is expected that the geopolitical nature of the current energy
crisis will act as a driver for more renewable and nuclear-based energy strategic autonomy. The EU's
response has consisted mainly in speeding up the energy transition and renewables goals, increasing
the emphasis on green hydrogen and energy interconnections.

In the long run, the acceleration of European decarbonization efforts, imposed by Russian weaponization
of energy, will be consistent with heightened climate ambitions. In order to sustain the EU's credibility
and commitment to address the climate crisis, Europe should reinforce its climate governance
through its European Grean Deal implementation programme, the Fit for 55. The EU should also help
deliver an ambitious result at the next COP to be held in Egypt by, among others, promoting
enhanced ambition, further climate finance commitments, advancements in the Global Goal on
Adaptation and embracing the debate on Loss and Damage and its finance in earnest. The prospects
of an auspicious outcome are however uncertain.

The current European energy crisis opens many geopolitical, energy and climate uncertainties that
will be addressed during the event. These will include, among many others: How will European energy
diversification proceed? Which alternatives are viable for each energy source? What diversication
pathways exist that rely on a speedy deployment of renewable sources? What kind of new interdependence
patterns, including new vulnerabilities, are likely to emerge? How will European energy policy
reconcile short-term and long-term measures? Which dominant European energy policy pathway will
emerge from the current crisis? How can climate ambition be politically sustainable in the midst of the
energy crisis, in spite of being compatible with demand reduction measures? How can European
climate leadership endure in international climate negotiations given the current context?

In the closing session, we will have the honor of having the Third Vice-President of Spain and Minister
for the Ecological Transition and the Demographic Challenge, Ms Teresa Ribera.

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