EU overhauls energy policies to avoid repeating 2022's costly crisis mistakes
EU leaders are reviewing energy policies to prevent a repeat of the costly mistakes made during the 2022-2023 crisis. New proposals aim to stabilise electricity prices while ensuring long-term decarbonisation goals remain on track. Key measures include reforms to the Emissions Trading System (ETS) and support for renewable energy contracts.
Since Russia's invasion of Ukraine in February 2022, Europe has drastically cut its reliance on Russian fossil fuels. Pipeline gas imports from Russia fell from 40% of total supply to under 10% by 2026, while LNG imports from Russia also dropped sharply. Overall, Russian fossil fuel imports declined by about 90%. The US now leads as the EU's top LNG supplier, providing around 45% of imports, followed by Norway (30% for pipeline gas), Qatar, and Australia. Domestic renewables and efficiency improvements have further reduced demand.
The EU's fossil fuel supply is currently secure, but recent geopolitical tensions—such as the US-Israel conflict with Iran—have already added €6 billion to Europe's oil and gas import costs. To prevent future price shocks, the Market Stability Reserve will be strengthened to cushion extreme price spikes. Long-term power purchase agreements (PPAs) for renewables are also being promoted to keep electricity costs stable. Meanwhile, the EU's Emissions Trading System (ETS) is set for reform to give businesses more flexibility. Revenues from the ETS will be redirected to help energy-intensive industries, particularly in lower-income countries, transition to cleaner operations. Leaders stress that short-term fixes must not delay decarbonisation, increase oil and gas demand, or strain public finances. On another front, the EU is preparing a 28th corporate law proposal, allowing companies to register fully online within 48 hours for no more than €100. This new system will also remove minimum capital requirements, simplifying business formation.
The proposed changes seek to balance affordability, security, and sustainability in Europe's energy sector. Existing nuclear plants will remain operational to provide low-cost, low-emission power, while the merit-order pricing system for electricity will stay in place. The reforms aim to avoid past errors while supporting industries through the green transition.
