The Russian-Ukrainian gas transmission agreement has expired, and only two of the six main Russian gas pipelines to Europe are still in operation. There are different opinions within Europe: the European Commission said that most countries can cope with this change, while Slovakia, Hungary and non-EU countries such as Moldova accused Ukraine of refusing to renew the Russian gas transit agreement. At the same time, the United States is seen as the “winner” of this change, while Europe has also heard voices of concern about over-reliance on the United States. Renewable energy is the main way for the European Union to solve the energy crisis, but the recent sharp fluctuations in electricity prices have caused European people to worry about the instability of renewable energy.
The Impact of the Expiration of the Russian-Ukrainian Gas Transmission Agreement
Moldova, a non-EU country, is already facing a serious energy crisis. With the expiration of the Russian-Ukrainian gas transmission agreement, more than 1,500 apartment buildings in the Transnistria region of Moldova, a separatist region, have no heating and hot water, nearly 72,000 households have no natural gas, and about 150 boiler rooms have been closed. At present, local governments have formulated a schedule for rotating power outages. Russia supplies Moldova with about 2 billion cubic meters of natural gas each year, which is transported to the Transnistria region of Moldova through Ukraine, where it is used to produce electricity and then sold to areas controlled by the Moldovan government. Before the gas supply was cut off, Moldova had long been in arrears in payments.
For most other EU countries, the impact of the “gas cut” between Russia and Ukraine does not seem to be “fatal”. According to data released on the EU official website, the proportion of EU member states importing Russian pipeline natural gas has dropped from 40% in 2021 to about 8% in 2023. The European Commission also stated that the EU is prepared for this change, most countries can cope with it, and the “gas cut” will not have much impact on EU natural gas prices.
However, European natural gas prices have risen. After Russia stopped supplying natural gas to Europe through Ukraine, the European natural gas benchmark price, the Dutch TTF, rose more than 4% on the first trading day to 51 euros per megawatt-hour, the highest level since October 2023. In terms of natural gas reserves, although the filling rate of natural gas storage facilities in EU countries reached 95% two months before the start of the heating season in November 2024, the cold weather in November caused the natural gas extraction to hit a 15-year record. By early December 2024, the filling rate of storage facilities was only 86%, compared with 96% last year. In addition, the cost of filling storage facilities after the winter is over may be higher than expected.
The EU is Unlikely to be Overly Dependent on US Energy
The EU’s dependence on Russian natural gas is now a thing of the past. In recent years, the EU has increased its imports of US liquefied natural gas. However, this is not entirely voluntary and is partly due to the EU’s concerns that the next US government may impose tariffs on not buying more US liquefied natural gas.
Europe’s increased imports of US liquefied natural gas also bring new risks. US liquefied natural gas prices fluctuate greatly and the stability of supply is questionable. “The reward for Europe is having a diverse group of U.S. suppliers, but the risk is that U.S. policy may change significantly in the future,” said Ella Joseph, a senior fellow at Columbia University’s Center on Global Energy Policy. In 2023, the EU’s imports of liquefied natural gas from the United States accounted for 46% of its total imports, nearly doubling from 2021.
The EU is unlikely to be overly dependent on U.S. energy, but this dependence will become smaller and smaller in the future. On the one hand, the high cost of U.S. natural gas is only a supplement to the EU and is unlikely to become the EU’s sole energy source. On the other hand, the EU’s future direction is to vigorously develop new energy, while most of the energy provided by the United States to the EU is still traditional energy.
Germany’s Electricity Supply and Demand Will Still be Seriously Unbalanced
Renewable energy is the main way for the EU to solve the energy crisis. In the past two years, the EU has accelerated its energy transformation and invested more than 500 billion euros in renewable energy, energy storage, grid upgrades and hydrogen development projects. In the first half of 2024, wind and solar power generation rose to a new high, reaching 30% of the EU’s total power generation, exceeding fossil fuels for the first time. According to data from the German Federal Statistical Office, in 2023, about 25% of the EU’s total final energy consumption will come from renewable energy. In 2010, this proportion was 14%. The EU’s goal is that renewable energy will account for 45% of total energy consumption in 2030.
However, the advancement of green transformation is not smooth sailing. On January 2, 2025, Germany, Europe’s largest electricity market, had negative electricity prices for 4 hours, which means that the oversupply in the electricity market has led to a negative market settlement price. Negative electricity prices indicate that Germany’s electricity supply and demand will still be seriously unbalanced in the new year. Europe has experienced several days of windless weather, which has led to the stagnation of wind power generation. In addition, the cold weather after the winter has increased people’s demand for electricity, causing electricity prices to soar to an 18-year high. However, not long after, strong winds caused a surge in power generation, causing electricity prices to fall sharply again. This instability has put higher demands on grid management and highlighted the challenges in Europe’s energy transformation.
Unstable power supply is also exacerbating internal divisions in Europe. In December 2024, faced with rising domestic electricity prices and supply pressure, the Norwegian ruling party and the leading opposition party in the polls plan to cut off electricity interconnection with Denmark and renegotiate electricity interconnection with Germany and the United Kingdom, which has aroused concerns among EU countries. Ebba Busch, Deputy Prime Minister and Minister of Energy and Business of Sweden, said that Germany’s policy of phasing out nuclear power was the main reason for the sharp rise in EU electricity prices, and he was “very angry” with the German government.
Renewable energy makes Europe’s power generation and supply system more vulnerable to damage. The greater the proportion of renewable energy, the greater the dependence of European electricity on the capricious sun and fickle wind. Therefore, in order to solve the problem of energy shortage, building cross-border energy infrastructure should be the EU’s top priority.
