Following Russia’s full-scale invasion of Ukraine, the European Union has taken decisive action to expedite the shift away from fossil fuels. Through initiatives focused on energy savings, enhancing energy efficiency and ramping up renewable energy capacity, coupled with additional imports of liquefied natural gas, the EU has effectively mitigated the impact of the Russian gas supply shock and stabilised the energy market. As a result, European gas and electricity prices have plummeted to pre-war levels, gas reserves are at historic highs, and the reliance on Russian gas has declined from over 40 per cent of total EU gas imports before the war to less than 10 per cent now.
However, in accelerating the clean energy transition in response to the energy crisis, new challenges have begun to surface. The swift deployment of solar and wind power has triggered a corresponding surge in the EU’s reliance on China for critical raw materials and clean tech products. In times of increasing geopolitical confrontation and geo-economic fragmentation, this rising dependence raises serious concerns over EU economic security. Moreover, the uptake of technologies like electric cars and heat pumps, and the growing penetration of renewables, are producing grid congestion in many parts of Europe, increasingly turning grids into a major bottleneck for the green transition. Additionally, EU renewable energy developers are encountering financing difficulties in the face of rising interest rates and supply chain inflation, exacerbated by national subsidy auctions that have not kept pace.
The main question for EU policy is how to ensure a smooth, swift and fair shift away from fossil fuels that is aligned with the strategic vision of the Green Deal
Social dynamics and environmental factors further complicate the transition, with tensions arising between renewable energy expansion and nature conservation objectives, alongside diminishing public support for the Green Deal. Recent protests, such as those against an electric vehicle battery plant project in Hungary, underscore the challenges of balancing the clean energy transition with concerns over water usage, air pollution and job displacement. Meanwhile, the agricultural sector’s recent demonstrations highlight the perceived risks to livelihoods in the phasing out of fossil fuel subsidies. Amid these social challenges, a significant skills gap for net-zero industries and the broader implications of the green transition for EU competitiveness also remain to be addressed.
Therefore, the main question for EU policy is how to ensure a smooth, swift and fair shift away from fossil fuels that is aligned with the strategic vision of the Green Deal, while also de-risked from third countries such as China for critical raw materials and clean tech products. Recent policy endeavours, such as the Green Deal Industrial Plan, the European Wind Power Action Plan, and the Grids Action Plan, signal the EU’s commitment to this cause. However, effective implementation of these measures will now be paramount to overcoming the challenges looming over the EU’s clean energy transition. Additionally, on the social front, more comprehensive strategies and an open dialogue on transitional challenges are needed to put fairness at the heart of the energy transition. In the upcoming institutional cycle of 2024 to 2029, navigating these complexities will require a concerted effort to realise the clean energy future Europe wants.