The European Union has spent an extra €90 billion on fuel imports since the escalation of the conflict surrounding Iran and the blockade of the Strait of Hormuz. European Commission President Ursula von der Leyen announced the figure at the European Parliament during her State of the Union address. She warned that without a overhaul of its energy model, the continent risks losing its status as an industrial powerhouse.
The Strait of Hormuz Blockade and the Drive for Electrification
The closure of the Strait of Hormuz has once again exposed Europe’s vulnerability to external suppliers. According to the European Commission chief, the massive sums went solely toward covering price adjustments. To address the issue, Brussels aims to double electricity’s share in the energy mix by 2040, which would cut its annual import bill by €260 billion.
Von der Leyen urged member states to pursue complete independence, technological neutrality, and the rapid development of domestic clean energy sources, including renewables, nuclear power, and biomethane.
To implement this plan, the EU must resolve infrastructure bottlenecks. Last year, member states added more than 80 gigawatts of green capacity, but six times that amount remains stuck in connection queues. Faster deployment of energy storage and grid modernization are intended to help resolve the backlog.
NEWSROOM IN notes that the EU previously underwent an emergency market restructuring following the sudden halt of Russian pipeline gas supplies. At that time, the bloc was forced to increase liquefied natural gas purchases, turn to alternative exporters, and raise investments in renewable sources. However, the new Middle East crisis confirms that rerouting supply lines is not enough to ensure price stability without expanding domestic generation.
