With a second energy shock hitting the continent in less than a decade, Europe’s structural issues related to energy dependency are becoming hard to ignore. As prices soar and economic stability hangs on the line, the transition toward sustainable energy sources to meet demand is becoming more appealing—and more urgent—than ever before.
The first shock occurred in 2022, with Russia’s invasion of Ukraine. This had severe impacts on energy and food markets, causing millions of households and businesses across the EU to face exceptionally high energy bills and rising inflation. As a result, member countries came together, recognizing their economies’ vulnerability to such shocks, and began working to find a solution. With the Versailles Declaration agreed in March 2022, EU leaders committed to phasing out the EU’s dependence on Russian fossil fuels and diversifying energy supply. Their collective efforts proved effective, and in December 2023 the price of gas fell to €34 per MWh, nearly nine times less than it did at the peak of the crisis, when the price reached over €300/MWh. Additionally, there was a cut in energy demand, lowered gas consumption, and a higher consumption of renewable energy, with 56 gigawatts of new photovoltaic capacity installed.
In principle, the EU achieved its goal, but the recent supply shock linked to the Iran war reveals the problem persists, and the 2022 strategy focused on diversifying suppliers rather than reducing dependence altogether. According to Eurostat, in 2024 Europe’s energy dependency rate was 57%, and of the energy that is imported 67% of it is oil and petroleum products, 24% is natural gas, 4% is solid fossil fuels, and only 2% is renewable energy.
Today’s geopolitical instability and energy market volatility creates a critical opportunity for European countries to finally address the root of the problem, and come together again in the spirit of constructing a long term beneficial solution. With the global supply of energy as the weapon of choice in the current middle east conflict, the long term economic effects for the EU if they don’t find a self-sustained way to meet their own energy demand could be devastating.
Last week, Christine Lagarde, President of the European Central Bank, stated during her keynote speech that “setting monetary policy in such an environment is challenging [….] Europe faces one of the most decisive moments in the 75 years since this association was founded. The pace of change is disorienting. The shocks keep coming” (European Central Bank, 2026).
This signals that the response to a shock of this magnitude must be structural, and monetary policy alone may not be enough to alleviate the consequences. In 2022, Europe demonstrated effective teamwork in pursuing a common goal, and this time should be no exception.
One country that has done an exceptional job and should serve as a model for others is Spain. Benefiting from their geographical conditions and climate, the country has invested in large-scale solar installations and wind turbines that today successfully supply more than 50% of the country’s energy generation. The reduced costs of technology needed to generate green energy is essential, and multiple companies have made significant investments that are accelerating this energy transition for the country. Spain serves as proof that renewable self-generated energy is the most efficient way to reduce dependency on foreign energy supply, and Europe’s proximity to its member countries could represent an advantage, as it is easier to transport energy. Tapping into the sustainable energy sector also represents a great business opportunity, and incentives for big infrastructure investments are more evident than ever.
In conclusion, the Iran war has once again exposed the limits of Europe’s current energy strategy, showing that reducing dependence on one supplier does not mean true energy security, and highlighting self generated green energy as the true long term solution. While war is never desirable, this crisis could nonetheless mark a turning point, prompting a shift in lifestyles and industries toward reduced reliance on highly polluting fossil fuels, aiming for a more sustainable future.
Written by Alicia Guerrero
References
https://www.iai.it/en/publications/c05/europe-wanted-quit-russian-energy-irans-war-just-complicated
https://ec.europa.eu/eurostat/web/interactive-publications/energy-2026
https://www.ecb.europa.eu/press/key/date/2026/html/ecb.sp260420~cdf674023e.en.html
https://www.consilium.europa.eu/en/policies/ending-russian-energy-imports
