Europe is expected to head into another energy crisis in 2025 due to a tighter market for liquefied natural gas (LNG), meaning another round of price hikes at a time when the fragile European economies strive to shake off the first round of price hikes.
Another factor is the prospect of a shortfall in gas supplies out of the United Kingdom due to the Labor government’s policies against oil and gas producers, such as new taxes and the banning of oil drilling in the North Sea to pursue its climate goals.
A third factor is the projection of a 10 percent jump in LNG demand in 2025 compared with the previous year.
“Europe is caught in the middle of a wave of geopolitical events that push it into a second energy crisis,” Oil analyst Fanis Matsopoulos, an executive board member of the Athens Chamber of Commerce and Industry, told The Epoch Times via email.
“The ranging of the Russian-Ukraine war keeps disrupting Russian gas supplies to Europe, while tensions in critical ‘choke points’ like the Strait of Hormuz and the Red Sea could slow down Middle East supplies.”
Jean-Baptiste Wautier, a financial expert and World Economic Forum speaker, sees the conflict in Ukraine and its accompanying sanctions, and the overall instability in the Middle East, as the primary sources of Europe’s energy crisis.
“The decision to reduce dependency on Russian oil and gas has increased the overall cost of supply for European countries that are not self-sufficient from an energy perspective—ditto for Iran,” he told The Epoch Times via email.
Matsopoulos sees Germany as hit the hardest, because it relies mainly on Russia for its energy needs. “When Russia invaded Ukraine, the price of natural gas and crude oil skyrocketed and, consequently, eliminated this German competitive advantage,” he said. “Today, we are standing at the same point.”
“Unfortunately, the biggest economy of the EU and the largest contributor to the EU budget did not meet the historical expectation of European citizens, and caused chaos by being so narrow-minded and short-sighted in the case of European energy stability,” Matsopoulos said.
He sees several solutions to the problem. One is diversifying energy sourcing, which already includes more imports from the United States and Qatar.
“This would ensure a steady supply of natural gas to European gas-powered factories,” he said.
Another solution would be the acceleration of the green revolution. “Europe was a pure importer of natural gas and oil, and the only way to escape from this extremely harsh position would be to enhance the penetration of green energy in every aspect of the economy,” Matsopoulos said.
A third solution involves expanding LNG infrastructure by building more terminals, making importing oil from the United States and Qatar easier, like the Alexandroupoulis-Greece and Wilhelmshaven Lubmin terminals in Germany.
However, the IER report expresses some skepticism about renewable energy as a solution. “Europe’s growing reliance on intermittent wind and solar will mean more expensive backup energy, adding to consumer cost burdens,” it said.
Meanwhile, the report sees that the future of U.S. LNG exports is uncertain, because U.S. courts may challenge President Donald Trump’s efforts to lift former President Joe Biden’s pause on LNG export licenses.
Wautier does not see any quick fixing to Europe’s energy mess, as energy consumption continues to increase yearly, and renewables are only a tiny fraction of European needs.
“Any policy aiming at changing the mix or reducing overall consumption takes years, if not decades, and most European countries run large public deficits and debt, so they won’t be able to accelerate easily,” Wautier said. “The only possibility to mitigate further would be to invest massively at a European level, as the recent Draghi report suggested. Still, it doesn’t seem this is the current direction of travel for the European Commission!”
The Draghi report is a 2024 report addressing European competitiveness and the future of the European Union. It was authored by former European Central Bank president and former prime minister of Italy Mario Draghi.
