The challenges, advances and opportunities that Europe faces in energy matters, as well as the current state of the world economy and its implications for the future of energy, have been the topics addressed in the last high-level conference session of the Energy Prospectives cycle, organized by Fundación Naturgy and IESE Business School, which on this occasion brought together two key figures from the European energy and economic field, such as Kadri Simson, former European Commissioner for Energy and Raymond Torres, director of Economic Situation at Funcas and the Observatory. Funcas Europe.
Both Simson and Torres agreed on the need to maintain the momentum towards an energy transition that combines security, sustainability and competitiveness, highlighting the role of renewable and alternative energies such as biomethane. Europe has demonstrated resilience, but the future will continue to require strategic decisions and urgent mobilization of resources to ensure its energy independence and stability.
The strategic turn of energy policy
Simson highlighted how, until 2022, “the political debate on the European energy agenda prioritized low costs over strategic independence,” resulting in approximately 20% of Europe’s energy imports coming from Russia. “The crisis resulting from tensions with gas suppliers meant that Europe paid close to 640 billion euros in fossil fuels during that year”, which in Simson’s opinion, served to promote “a change of approach anchored in three vectors such as security, prices and sustainability.”
The former commissioner assured that there is consensus on climate laws, “although the real unknown is whether Europe will be able to comply with them.” Avoiding strategic dependence on other countries “has become one of the fundamental objectives, in a context marked by the volatility of energy markets and geopolitical tensions,” said the former commissioner.
Among the most significant advances, Simson mentioned that in 2025 “renewable energies will surpass fossil fuels for the first time in Europe, which represents a milestone in the energy transition.” Furthermore, he highlighted the role of biomethane as “a promising alternative to replace imported gas, given that it is produced on European soil and can take advantage of the existing gas pipeline infrastructure, offering a cleaner and more economically viable option.”
However, from his point of view, “European industry continues to face an energy competitiveness problem, since energy prices in Europe are approximately double those in the United States and exceed those in China.” For Simson, lowering costs means “accelerating the transition to green energy, promoting industrial electrification and decarbonization, and protecting European industry from international competition.”
“The energy transition, according to Simson, is unstoppable and continues to be a central issue in the European debate. Europe imports close to 90% of the oil and gas it consumes, remaining exposed to market volatility.” However, important steps have been taken to strengthen energy security, such as the implementation of new gas storage standards and international agreements to diversify suppliers. “The great challenge now is to maintain the momentum and move towards a transition that combines security, sustainability and competitiveness.”
The European paradox
For his part, Raymond Torres assured that Europe “has been trying to advance in renewable energy and energy independence for at least a decade.” In fact. In Spain, 59% of electricity production already comes from renewable sources, but international crises continue to have a considerable impact on prices. “The conflict in Iran, for example, has caused an increase in energy prices for European companies and citizens, far above what is happening in the United States, which shows persistent tension and contradiction.”
Torres identified three key elements that explain this paradox, “the investment deficit, competitiveness and regulation.” Europe invests around 1.5 points less of GDP than the United States each year, dragging a deficit since the financial crisis. Although in labor terms Europe does not present a structural competitiveness problem, it does have one in energy prices, although Spain stands out for having an electricity cost that is 20% lower than the European average. “In addition, the volatility of energy prices is linked to the fluctuation in the price of gas, which maintains the vulnerability of the system even with a greater presence of renewables.”
Torres agreed with Simons that biomethane can also be part of the solution to solve the energy trilemma along with other technologies such as nuclear energy. The fundamental thing is to guarantee predictability in energy decision-making, since investors need to know the future scenario to mobilize resources. Torres closed his speech with a positive message, “the European economy has shown remarkable resilience in the face of recent crises, and urgency can be a driver of solutions and market integration.”
At the beginning of the session, Rafael Villaseca, president of the Naturgy Foundation, highlighted the importance of offering a detailed and in-depth vision of the energy sector, because in his opinion, “It is almost impossible to think about economic crises without talking about energy. The impact that energy has had on economic crises, or the economic crisis on energy, has been and continues to be decisive. The trilemma of the energy sector is, once again, altered by geostrategic factors, with the price skyrocketing, security in question and the confidence that these situations will be reversed today is a big question mark.”