Energy price increases such as those triggered by the war in Ukraine make faster decarbonization more cost effective, according to a new analysis of the EU energy system. The net benefits could amount to roughly 3% of the bloc’s projected GDP in 2050, the study suggests.

In the past, the EU has been highly dependent on imported oil and gas. Russia’s full-scale invasion of Ukraine in early 2022 caused fossil fuel prices to spike and prompted EU leadership to reduce or eliminate imports of Russian natural gas.

In turn, this sudden drop in energy supply has left the EU with an “energy gap.” In the new study, researchers use a pair of computer models to conduct a comprehensive cost-benefit analysis of short- and long-term solutions to filling in the gap.

Short-term strategies to increase the energy supply such as burning more coal or biomass involve high costs, a heavy public health burden, or both, the analysis shows. Meanwhile, demand-side solutions like reducing private transportation by 20% or turning down thermostats by 3 °C to reduce heating demand have limited impact.

With short-term solutions inadequate and geopolitical developments in the Middle East and elsewhere suggesting the energy crisis is likely to persist and can’t simply be white-knuckled through, the researchers turned their attention to solutions that would fundamentally reorganize the EU’s energy system in the coming decades.

 

 

Three scenarios that involve increasing electrification, increasing renewable sources of energy like solar and wind power, and reducing private transportation while filling in the remaining energy gap with renewables would all reduce net costs to society by 2050, the researchers found.

New infrastructure and equipment required for electrification and building out renewables costs money. A lot of money. But the savings from lower fuel prices, reduced public health burden from air pollution, and lower costs to society from climate change are greater than those costs.

“Eastern EU countries such as Poland, Latvia, Slovakia, and Hungary are more reliant on Russian imports and exhibit the largest benefits,” the researchers write.

In fact, why wait for 2050 to complete the greening of the energy system? The analysis shows that if high energy prices persist, an even faster rollout of renewables and decarbonization is cost effective.

With energy prices as high as they were in August 2022, the benefits of moving the EU’s current 2050 renewables target ahead by 5, 10, or even 20 years outweigh the costs. The savings on fuel, public health, and climate change costs are greater than the expense of quickly building new power plants and other renewable energy infrastructure.

However, in some of the scenarios analyzed the outcomes differ by country: Even if the EU as a whole shows a net benefit, individual countries might not, highlighting the need to develop strategies tailored to each country’s situation to keep things equitable across the bloc.

The researchers also modeled an even more ambitious energy transition goal, a net-zero-emissions push that would require increasing the EU’s share of renewables to 80%. In this scenario, an accelerated green transition looks good at moderate fuel prices, not just high ones.

“This suggests that once energy prices surpass a certain threshold, initiating the transition earlier becomes increasingly beneficial,” the researchers write.

Source: Meng W. et al. “Rethinking energy transition strategies for the European Union amid rising energy prices.” 2026.

Image: ©Anthropocene Magazine.