After decades of investing in renewable energy sectors while decreasing investment in fossil fuels and relying on Russian gas instead, the European Union now finds itself in an energy crisis. After the Russian invasion of Ukraine, Europe responded by banning the importation of Russian gas. Sabotage also rendered the Nord Stream pipelines inoperable – though the identity of the saboteur remains disputed. With a cold winter looming, Europe has now plunged into an energy crisis and must quickly figure out how to lower skyrocketing gas prices and help citizens be able to heat their homes. However, any solution should focus on the long-term implications that the energy crisis has and not be narrowly focused on this winter alone. While a uniform approach to the problem would render the greatest success, EU member-states have varying approaches on how to solve the issue – making a one-size-fits-all approach difficult for members to agree on. 

While this crisis has been foreseeable since the onset of the invasion, unusually high temperatures throughout most of this year have not made this a very pressing issue. For example, Italy did not reduce energy consumption at all during the first half of the year. Nevertheless, Europe has already been seeing major impacts. Gas prices in Europe are eight times higher than the United States and natural gas prices are ten times higher than they were one year ago. Accompanied with inflation, European citizens and businesses are struggling to pay electricity bills. This has led to a splintered, every-man-for-himself approach by many EU nations.

Recently, Germany announced a $196 billion dollar plan to help curb natural gas and electricity prices domestically. The plan includes a 12% reduction in the gas tax, promotion of renewable energy, development of liquefied gas terminals, and continuing operation of two nuclear power plants that were previously scheduled to close. The massive plan will cost Germany 5% of its annual GDP. Many other states in the EU have sharply criticized the plan because Germany’s self-prioritization will increase prices in other states that cannot afford to spend 5% of their own GDP on similar energy crisis measures. 

Instead, many states are advocating for solidarity – one approach by Europe that will benefit everyone. European Commission President Ursula von der Leyen recently shared concerns saying that subsidies may hurt the single market, “our single best asset in times of crisis.” French President Emmanuel Macron has also stated, “if we stay nationalistic, we will be idiots.” Meetings between European leaders have been ongoing for much of October and will likely continue through the end of the year to come up with patchwork and piecemeal plans to get through the winter, but this crisis will not be going anywhere soon. Next year, Europe will not be able to rely on any Russian gas at all. Any solution should consider the long-term implications for energy supplies and help prevent similar crises from becoming an annual occurrence. 

Several proposals have been introduced and considered, but none are foolproof. Spain and Portugal have set price caps on gas to help lower electricity costs. In Portugal, the cap is set at 17% of market value. While such a method could be effective on an EU-wide scale, direct intervention is not popular with traders and could contribute to an already unstable market. Further, Germany’s opposition to the Iberian Model renders its adoption very unlikely. Another possibility is to place a windfall tax on the profits of oil and gas companies, much like the United Kingdom who has placed a 25% windfall tax. However, if these taxes are carried out across Europe, companies would likely just reduce output – further destabilizing the economy and placing increased strain on energy supplies. Critics argue that windfall taxes retrospectively punish profits that are deemed “too high” and largely ignore the overall increase in consumer and industry energy prices. 

It will be difficult to impose a one-size-fits-all solution amongst all EU states, especially now that Germany has already taken matters into its own hands. There will be much debate about whether any measure will work in the long-term. However, there is one approach that has the highest chance of success – reduce demand. Europe’s reliance on Russian gas is relatively new  and a return to Cold War era practicalities may be in the near future. If citizens reduced their thermostats from the current average of 71.6 degrees down to an average of 66.2 degrees, then Europe would likely be able to sustain themselves on their limited supplies. Furthermore, the European Council has already agreed to reduce demand by 15% this winter. However, this is voluntary and is riddled with numerous exceptions and exemptions, such as exemptions for member-states that do not have interconnected systems with other states. A mandatory approach for a reduction in demand that is carried out across Europe would likely succeed, but it would require European citizens to share some discomfort. These measures have historically been very unpopular among the affected populaces, as was evident during the 1970s when President Jimmy Carter urged Americans to lower their thermostats in response to an energy crisis.  

Oddly enough, the fate of the energy crisis for the EU mostly lies with a non-EU state – Norway. Norway has replaced Russia as the EU’s primary gas supplier. As a result, Norway is expected to bring in $82 billion dollars more than last year from their petroleum sector. Critics argue that Norway is profiting from the war and should share those profits with others. Nevertheless, a long-term deal between the European Union and Norway to supply oil to the European Union could help lower prices and provide energy security to Europe for years to come. If Europe can overlook the short-term profits Norway has been able to make, such a deal would help quell the uncertainty that lays ahead. 

It is imperative that the European Union member-states work together and solve this problem quickly and successfully. Over the last decade, the rise in Euroscepticism and botched attempts to solve crises like the Covid-19 pandemic have severely hurt the effectiveness of the European Union. The recent Italian elections highlight this rise in Euroscepticism. Similar sentiments will only increase if people aren’t able to heat their homes this winter. The European Union must act or else a chilling future lies ahead for Europe. 

Author Biography: Austin Newman is a moderator of the International Law Society’s International Law and Policy Brief (ILPD) and a J.D. candidate at The George Washington University Law School. He has a Bachelor’s Degree in Political Science from Christopher Newport University.