Lorenzo Maria Pacini
The fundamental question is whether Europe can survive the energy crisis without permanently losing its industrial base and its position in the international economic system.
Anatomy of a systemic energy shock
Between 2021 and 2024, the European energy system underwent an accelerated and traumatic transformation unprecedented in the continent's postwar economic history. The combination of Russia's SMO of Ukraine in February 2022, the resulting sanctions regime, Moscow's energy retaliation, and structural tensions in Middle Eastern shipping routes generated what we might call a double geo-energy shock: the simultaneous disruption of Europe's two main fossil fuel supply routes-the Russian corridor to the east and the Persian Gulf corridor to the southeast.
To understand the scope of this crisis, we must start with a clear picture of the pre-crisis situation. In 2021, the European Union imported approximately 155 billion cubic meters (Bcm) of natural gas from Russia, accounting for 45% of its total demand (Eurostat, 2022). Imports of Russian oil amounted to approximately 2.7 million barrels per day, accounting for 27% of total imports. Russian coal accounted for 46% of European imports. In total, it is estimated that Russia supplied the EU with approximately 24% of the primary energy consumed-a level of dependence unmatched by any other alliance system in the contemporary world.
At the same time, a significant and growing portion of European LNG (liquefied natural gas) imports came-and still comes-from the Persian Gulf region, particularly from Qatar. These supplies must pass through the Strait of Hormuz and the Red Sea before reaching European regasification ports. The crisis in Yemen and Houthi operations in the Red Sea beginning in late 2023 have turned a vulnerability that had remained largely theoretical for decades into a concrete reality.
What does the actual map of European energy routes alternative to those from Russia and Iran look like today; what is the real cost-not only in terms of price, but also of industrial competitiveness, inflation, and social stability-of the forced shift to these alternatives; and what are the concrete prospects for structural resilience of the European energy system over the next ten to fifteen years.
Key Fact
In 2021, Russia supplied 45% of the gas, 27% of the oil, and 46% of the coal imported by the European Union. The nearly simultaneous loss of these flows represented the greatest energy supply shock in the continent's history since 1973.
- The Geography of European Energy Routes and Its Breakdown
2.1 The Architecture of the Pre-2022 System
The European energy supply system built over the thirty-year period from 1990 to 2020 was based on a logic of infrastructural integration with Russia that prioritized economic stability and cost reduction over strategic diversification. Russian gas reached Europe through a pipeline network structured around three main corridors:
the Northern European corridor (Nord Stream 1 and 2, with a total capacity of 110 Gmc/year), the Ukrainian corridor via the Ukrainian transmission system (approximately 40-45 Gmc/year in recent years), and the Southern corridor via TurkStream and the Balkan system (approximately 30 Gmc/year).
This architecture offered clear economic advantages: Russian pipeline gas cost, prior to the crisis, between 5 and 10 euros per megawatt-hour (MWh), compared to 10-15 euros for spot LNG from the Middle East and the United States. Integration was deep, with long-term contracts (typically 15-25 years) that guaranteed predictability for European buyers and secure revenue for the Russian budget. The logic of the system was what international relations theorists call "complex interdependence": mutual dependence would have made conflict economically irrational for both parties.
The breakdown of the Russian Corridor: dynamics and timing
The breakdown did not occur instantly, but followed a trajectory of gradual escalation that made the European response even more difficult. As early as the summer of 2021, months before the SMO, Gazprom had reduced flows to Europe while keeping its own storage reserves low, in what many analysts (Pirani, 2022; Oxford Institute for Energy Studies, 2022) interpreted as a deliberate strategy to drive up prices and weaken European reserves ahead of winter. With the onset of sanctions in February-March 2022, supplies underwent a gradual reduction: Nord Stream 1 was reduced to 40% of capacity in June 2022, then to 20% in July, until it was completely shut down in August 2022-officially due to a technical dispute over turbines, but de facto as a response to the sanctions.
The definitive event was the destruction of the Nord Stream 1 and 2 pipelines in August 2022-an act of sabotage for which responsibility remains the subject of ongoing international investigations-which made the loss of these corridors physically irreversible in the short to medium term. The Ukrainian corridor continued to operate under a separate transit agreement, which expired on December 31, 2024, and which Ukraine chose not to renew. TurkStream remains operational but primarily supplies the Balkan and Turkish markets. The overall effect has been a reduction in Russian gas supplies to the EU from 155 Gmc in 2021 to approximately 25 Gmc in 2023, representing a net loss of 130 Gmc in just two years (IEA, 2024).
The vulnerability of the Persian Gulf Route
The Strait of Hormuz-with a minimum navigable channel width of approximately 33 kilometers-is the single most critical transit point in the global energy system.
Approximately 20-21 million barrels of oil and refined products pass through it daily, accounting for about 21% of global oil consumption, as well as a significant share of global LNG trade (EIA, 2023). For Europe, the importance of Hormuz has increased dramatically since 2022: having replaced Russian gas with Qatari LNG (Qatar is the world's second-largest LNG exporter), Europe has shifted part of its energy dependence from a geopolitically risky corridor to the east to another geopolitically vulnerable corridor to the southeast.
The Red Sea crisis, which erupted in November 2023 with Houthi operations against maritime traffic in response to the conflict in Gaza, has transformed this theoretical vulnerability into a concrete operational problem. Traffic through the Suez Canal fell by 40-50% during the peak months of the crisis (Kpler, 2024), forcing a growing number of ships to sail around the Cape of Good Hope: an alternative route that adds 10-14 days to each voyage, with a corresponding increase in transportation, insurance, and capital costs.
Before 2022, Russian gas cost Europe 5-10 €/MWh. American or Qatari LNG as a substitute consistently costs 10-20 €/MWh under normal market conditions, with speculative spikes reaching up to 340 €/MWh in August 2022. This structural cost differential is the root of Europe's competitiveness problem.
Alternative Energy Routes: reality, capacity, and limits
In the 2022-2023 period, the United States became the leading supplier of LNG to Europe, with exports to the continent more than doubling compared to the pre-crisis period: from approximately 22 Gmc in 2021 to over 56 Gmc in 2023 (U.S. Energy Information Administration, 2024). This increase required both an expansion of U.S. liquefaction capacity-with new facilities approved in Louisiana and Texas-and a European rush to build or charter regasification terminals. Germany, which had no LNG terminals in 2021, commissioned four floating terminals (FSRUs) between December 2022 and mid-2023, with a total capacity of approximately 20 Gmc/year.
However, U.S. LNG has structural limitations that make fully replacing Russian gas problematic. First, the cost: U.S. LNG includes the costs of liquefaction, transatlantic transport, insurance, and regasification, making it structurally more expensive than pipeline gas.
Second, contractual rigidity: most long-term contracts for U.S. LNG impose "destination-free" clauses but include pricing mechanisms indexed to the U.S. Henry Hub market, creating misalignments with European needs. Third, transport capacity: the global fleet of LNG carriers is not large enough to fully replace the flows that previously traveled via pipeline, and a rapid expansion of the fleet requires construction times of 3-5 years per ship.
Qatar has signed long-term agreements with several European countries during 2022-2023, including Germany, France, Belgium, and Italy. These contracts, typically lasting 15-27 years, offer a degree of predictability but present two fundamental problems. The first is geographic concentration: all Qatari LNG exports must pass through the Strait of Hormuz, leaving the very geopolitical vulnerability that was intended to be reduced intact. A military crisis in the Strait or an Iranian blockade-a deterrent measure periodically invoked by Tehran-would simultaneously disrupt Qatari LNG and Gulf oil supplies to Europe.
The second problem is competition with Asian markets for Qatari LNG: China, Japan, and South Korea traditionally absorb the majority of exports from the Persian Gulf, and Qatar's expansion capacity (the North Field Expansion project, which will increase export capacity from 77 to 126 million tons per year by 2027) has already been partially pre-sold to Asian markets through contracts signed prior to the Ukraine crisis (Qatar Energy, 2023).
Norway has become the main supplier of pipeline gas to Europe post-2022, increasing its exports from approximately 113 Gmc in 2021 to over 122 Gmc in 2023 (NPD, 2024). However, Norwegian fields are already nearing their maximum production capacity, and the construction of new pipelines requires time and investment that cannot bridge the gap in the short term. Algeria supplies gas to Europe via the Medgaz (Spain) and TRANSMED (Italy) pipelines, with volumes stable at around 30-35 GMc/year. Here too, expansion capacity is limited by geological constraints and the need for significant investment in the development of new fields.
The Southern Gas Corridor-which connects Azerbaijan's Caspian gas fields to Europe via Georgia, Turkey, and Greece-Italy through the TAP (Trans-Adriatic Pipeline)
- reached full operational capacity in 2021 at approximately 10 bcm/year. In July 2022, Azerbaijan signed an agreement with the EU to double exports to 20 bcm/year by 2027, with potential further expansion to 30-35 bcm. This corridor offers the advantage of not depending on either Russia or the Strait of Hormuz, but its capacity remains marginal compared to European demand and the shortfall left by Russia.
The real cost of the energy shock for European industry
The TTF (Title Transfer Facility) index, the main European benchmark for natural gas, experienced unprecedented volatility in 2022: starting at around €75/MWh in January-already four times higher than the historical average-it peaked at €340/MWh in August 2022, before gradually declining due to a combination of full storage facilities, a mild winter, and reduced industrial demand. In 2023, the TTF stabilized in a range of €35-60/MWh-still double or triple pre-crisis levels, with a permanent impact on European production costs.
For electricity, the impact was amplified by the structure of the European market, which uses the "marginal pricing" mechanism: the price of electricity is determined by the marginal generation plant, typically a gas-fired power plant during peak demand. The resulting increase in the price of electricity for industrial use reached €300-400/MWh in several European countries in 2022-2023 (Eurostat, 2023), compared to a pre-crisis average of €60-100/MWh.
The sectors most affected by the energy crisis are energy-intensive sectors, where energy costs account for a significant share (typically 15-40%) of total production costs. The European steel industry has reduced steel production from 152 million tons in 2021 to 129 million in 2023, representing a loss of approximately 15% of production capacity (WorldSteel, 2024). Primary aluminum production has decreased by approximately 25%, with the temporary or permanent closure of numerous electrolysis plants in Germany, France, and Spain (European Aluminium, 2023).
The chemical industry-with Germany as its epicenter, where the sector accounts for over 3% of the national GDP-recorded a 12% drop in production in 2022 and a further 8% decline in 2023 (VCI, 2023). Particularly significant is the case of ammonia production, the basis for nitrogen fertilizers: most European plants use natural gas as a feedstock, and rising costs have made European production uncompetitive compared to that of the Middle East or the United States. Numerous fertilizer producers have reduced production or imported ammonia from abroad, with knock-on effects on the agricultural supply chain.
The ceramics and glass sector-in which Italy, Germany, and Spain are world leaders-has suffered a devastating impact, given the energy intensity of the production process (kilns operating at temperatures of 1200-1700°C). The Italian industry federation (Confindustria Ceramica) has estimated a 30-40% loss of competitiveness relative to Turkish, Chinese, and Indian producers in the 2022-2023 period (Confindustria Ceramica, 2023).
The impact of the energy crisis was not limited to the manufacturing sectors but spread to the entire economy through inflation. The overall consumer price index in the eurozone peaked at 10.6% in October 2022 (ECB, 2022), the highest level since the creation of the single currency. The energy component accounted for nearly half of this inflation, but second-round effects-rising prices for food, transportation, and services-spread throughout the entire economy.
The erosion of household purchasing power had not only economic but also political and social consequences, fueling discontent toward European institutions and the national political elites who had built and defended the model of energy dependence on Russia. The dimension of social cohesion-often overlooked in energy analyses-is nevertheless crucial for understanding the long-term political sustainability of any resilience strategy: without an adequate compensation system for vulnerable households and the most exposed industrial sectors, the consensus needed to finance the energy transition risks eroding.
The cost differential for industrial electricity between Europe and China in 2023 was approximately 5:1. Between Europe and the United States (benefiting from the IRA and shale gas), it was approximately 3.5:1. This structural gap renders entire segments of European manufacturing uncompetitive in international comparison.
Prospects for resilience: toward a New European Energy System
The long-term structural response to the dual Russian-Iranian shock can only be the reduction of dependence on imported fossil fuels through an acceleration of the transition to renewable energy. This is not an idealistic goal: it is a necessity of national security in the fullest sense. IRENA (International Renewable Energy Agency) estimates that a Europe generating 70-80% of its electricity from renewable sources by 2035 would see its dependence on fossil fuel imports reduced by 60-70% compared to 2021, effectively eliminating structural vulnerability to energy supply route crises (IRENA, 2024).
Progress in this direction is already significant. In 2023, for the first time in history, renewable sources (wind, solar, hydroelectric) accounted for over 44% of European electricity production, with peaks exceeding 50% in Germany, Spain, and Denmark (Ember, 2024). Installed solar photovoltaic capacity in the EU increased by approximately 56 GW in 2023 alone-the largest annual increase ever recorded. Offshore wind, with rapidly falling costs, is set to become the primary source of electricity generation in several Nordic and coastal countries by 2030.
However, the renewable transition requires solutions to two fundamental problems that remain partially unresolved: intermittency (solar generates only during the day, wind only when there is wind) and seasonal-scale energy storage. Lithium batteries are adequate for managing daily fluctuations, but not for offsetting the winter deficit in renewable production-the period when energy demand is highest and solar production is lowest. Green hydrogen (produced by electrolysis of water using renewable electricity) appears to be the most promising solution for seasonal storage and for the decarbonization of industrial processes requiring high temperatures, but its implementation on an industrial scale still requires significant investment and technological innovation.
One of the most significant developments in the post-2022 European energy landscape is the reevaluation of nuclear power as a low-emission and highly reliable energy source. The anti-nuclear paradigm that had dominated the energy policies of several European countries-Belgium, Germany, Switzerland-after Fukushima (2011) has been radically challenged by the energy crisis. Germany extended the operating life of its last three nuclear power plants until April 2023 (later abandoning the option of a further extension, in a controversial decision). Belgium decided in 2023 to postpone the closure of its reactors by ten years. France, with its fleet of 56 nuclear reactors that normally covers 70-75% of national electricity production, has launched a plan to build six new EPR2 reactors.
At the European level, there is growing interest in so-called Small Modular Reactors (SMRs)-small, modular nuclear reactors with lower construction costs and shorter build times compared to large conventional plants. Several European countries-Poland, the Czech Republic, Romania, and Sweden-have initiated evaluation processes or commercial agreements for the construction of SMRs by 2030-2035. If nuclear power can help provide a stable, reliable, and low-emission electricity generation base, it represents an indispensable pillar of any European energy resilience strategy.
Reducing demand through energy efficiency was, alongside the expansion of renewables, the fastest-to-implement response to the 2022 crisis. Natural gas demand in the EU fell by 13% in 2022 and by a further 7% in 2023, for a total of approximately 55 GMc less than in 2021-a reduction that, on its own, exceeded what was needed to survive the winter without Russian supplies (IEA, 2024). This reduction was achieved through a combination of individual behaviors (reducing heating in buildings, turning down thermostats), industrial measures (replacing gas with other energy sources, reducing production), and public policies (awareness campaigns, tax incentives for building retrofits).
The potential for further efficiency gains is enormous. It is estimated that the energy retrofitting of Europe's building stock-where approximately 75% of buildings are considered energy-inefficient-could reduce energy consumption for heating by 40-60% (European Commission, 2023). The REPowerEU plan, adopted in May 2022, allocated €300 billion to accelerate the energy transition, with a significant portion dedicated to efficiency in buildings and industry.
The crisis has highlighted not only the infrastructural vulnerabilities of the European energy system but also institutional weaknesses in energy security governance. Energy policy has historically remained a national prerogative, with European coordination limited to the general principles of the internal market. The result has been that different countries have developed different energy dependencies, with highly varied levels of vulnerability: Germany relied on Russia for 55% of its gas imports, while Spain was almost completely diversified thanks to its LNG terminals.
The response to the crisis demonstrated both the capacity for coordination under emergency conditions-the European agreement to voluntarily reduce gas consumption by 15% in the summer of 2022 was upheld-and the limits of fragmented governance. A genuine common European energy policy, with automatic solidarity mechanisms, shared strategic storage, and centralized contracting for LNG, could significantly reduce collective vulnerability in the event of future crises. The proposal to create a European Energy Agency with real powers-similar to the IEA but with binding authority over member countries-has returned with force to the continental political debate and deserves serious consideration.
If Europe maintains the current pace of renewable energy expansion and implements the energy efficiency plan outlined in REPowerEU, by 2035 dependence on gas imports could drop from 300 GMc/year (2021) to less than 100 GMc/year-structurally eliminating much of the vulnerability to energy route crises.
Three scenarios for European Energy Security by 2035
Scenario A - Accelerated resilience
In the first scenario, Europe maintains the pace of renewable energy expansion recorded in 2023, accelerates the building retrofit program, invests heavily in storage (batteries, hydrogen, PHES), and maintains or expands nuclear capacity. In this scenario, by 2035, fossil fuels would account for less than 30% of Europe's primary energy mix. Dependence on gas imports would fall to 80-100 GMc/year-entirely covered by non-Russian sources (Norway, Algeria, U.S. LNG, Azerbaijan). Vulnerability to crises in Middle Eastern supply routes would be drastically reduced, and the cost of industrial energy would become competitive with that of the United States thanks to falling renewable energy costs.
Scenario B - Gradual transition and residual vulnerability
In the second scenario-the most likely based on current trends-Europe reduces its reliance on fossil fuels, but at a slower pace than its stated ambitions. Bureaucratic obstacles, regulatory conflicts among member states, local opposition to new wind farms, and delays in grid investments slow the transition. Dependence on gas imports remains in the range of 150-180 GMc/year by 2035, with a significant portion transiting through vulnerable routes (Hormuz, Red Sea). Europe remains exposed to recurring energy crises, albeit with more developed response tools than in 2022.
Scenario C - Fragmentation and regression
In the third scenario, the domestic political crisis-fueled by the costs of the transition, inflationary pressure, and the emergence of nationalist political forces opposed to the common energy policy-leads to a fragmentation of European energy policies. Individual countries sign bilateral agreements with alternative suppliers (possibly including a partial resumption of Russian supplies in the event of a ceasefire in Ukraine), abandoning European coordination. In this scenario, collective vulnerability remains high and Europe's bargaining power vis-à-vis suppliers is drastically reduced.
Europe's energy survival is possible but not guaranteed
Between 2022 and 2024, Europe experienced the most severe energy shock since the 1973 oil crisis, and it did so under conditions of structural vulnerability built up over three decades of integration with Russian supplies. The immediate response-diversification of sources, accelerated construction of LNG infrastructure, demand reduction, and expansion of renewables-made it possible to avoid the large-scale rationing and industrial blackouts that many had feared. This is no small achievement, demonstrating the ability of the European economy and institutions to adapt rapidly under pressure.
However, surviving the acute shock does not equate to resolving the structural problem. Europe has replaced one dependency (on Russian gas via pipeline) with a set of partially different dependencies (U.S. LNG, Qatari LNG, renewables insufficient to meet total demand), some of which transit through geopolitically vulnerable routes such as the Strait of Hormuz and the Red Sea.
The energy cost differential with Asian and American players remains significant and risks leading to a silent deindustrialization in strategic sectors.
The prospect of long-term resilience exists and is concretely achievable, but it requires a convergence of factors that cannot be taken for granted: continued investment in renewables at rates higher than the current pace, resolution of the seasonal storage problem, maintenance of nuclear capacity, reforms of European energy governance toward a genuine common policy, and a support system for households and vulnerable sectors that maintains the social cohesion necessary to politically sustain the transition.
The fundamental question is not whether Europe can survive the energy crisis. It can. The question is whether it can do so without permanently losing its industrial base and its position in the international economic system. The answer depends on policy choices that European institutions and national governments must make over the next three to five years-a window of opportunity that history is not destined to keep open indefinitely.